A tribunal has ruled that security firm G4S cannot reduce its profits for tax purposes by deducting parking fines.
The company, G4S Cash Solutions, tried to reduce their corporation tax bill by approximately £580,000 but the first-tier tribunal has ruled in HMRC’s favour in rejecting the claim for the deduction of the fines.
The company G4S incurred a substantial amount of parking fines usually while delivering consignments of cash over the pavement. The business tried to claim these were a business expense and so could be used to reduce the company’s profits for tax purposes.
The tribunal ruled G4S staff consciously and deliberately decided to break parking restrictions for commercial gain.
The ruling upholds HMRC’s long standing view that fines for breaking the law cannot be used to reduce a tax bill.
HMRC’s Director General of Business Tax, Jim Harra, said:
‘We’ve always said fines incurred for breaking the law are not tax deductible. The tribunal has now established a clear precedent for rejecting any future such claims.’
If you would like advice on calculating your taxable profits and the deductibility of any expenditure please get in touch.
Internet links: Press release Tribunal decision
We don’t do politics either but we found this an enjoyable read from BKL regarding Cameron and his tax affairs
We don’t do politics. But we do do tax: and it hurts us to see a travesty of the facts reported in the press. So this note is about the “Panama papers” in general and Mr Cameron’s involvement in his late father’s investment fund in particular.
First, on the general point, there are all sorts of reasons for using non-UK vehicles, and they are used by all sorts of people. Some are driven by tax motives; some by a desire for confidentiality; and some by entirely commercial considerations having nothing to do with either. In each case the motive may be entirely innocent and understandable: or it may be less so, shading into criminality. We’re not so naïve as to suppose that Mossack Fonseca don’t number some crooks among their clients. But let’s not tar all users of non-UK arrangements with the same brush – it’s not fair and it’s not sensible.
Second, let’s look specifically at Mr Cameron. The investment which has caused such apparent controversy was not, as you might imagine from the press, a concealed bank account opened to conceal dodgy assets from HMRC. On the contrary, it was an investment in an investment company called Blairmore Holdings Inc. Like many other investment funds it solicited investments on the basis of its prospectus (available here should you be interested). Its prospectus sets out the intention that it should, like very many offshore investment funds, distribute the great bulk of its income to investors whereupon any UK-resident investors become liable to UK taxes. It is simply, in other words, a form of investment vehicle no different from hundreds or thousands of others which have been known and recognised by HMRC for many years and to which a specific well-established taxation code applies. To represent it as anything else is either ill-informed or mischievous.
Finally, when it comes to the fuss about Mrs Cameron’s gift to her son, we don’t know whether to laugh or cry. There is no Gifts Tax in this country because Parliament has not chosen to impose one. The idea that by making a gift Mrs Cameron is avoiding tax is risible. You might just as well say that anyone who spends their money rather than hoarding it is reducing their estate for IHT purposes and is a tax avoider: and that a miser who spends nothing is thereby reducing the amount of VAT he suffers and is equally a tax avoider. This way madness lies.