In HMRC v McLaren Racing (FTC/93/2012 - 17 June 2014) the UT found that a penalty paid by McLaren was not deductible.
McLaren the well-known Formula One motor racing team had by entering the 2007 world championship (and the Concorde Agreement) expressly agreed to be bound by the regulations of the Federation International de l’Automobile and the International Sporting Code. The World Motor Sport Council had found Maclaren guilty of spying on Ferrari a rival Formula One team and had imposed a £32m penalty for breach of the code.
The key issue was whether the penalty had been incurred ‘wholly and exclusively’ for the purpose of McLaren’s trade (ICTA 1988 s 74) which in turn depended on whether cheating was part of its trade. By casting vote of the judge the FTT had allowed McLaren’s appeal against HMRC’s decision not to allow...
