Parking fines – a business expense?

Accounting, Businesses, Corporation Tax, Tax/VAT Cases l

parking ticketsThe rules relating to the tax treatment of parking fines have been clarified thanks to a recent first tier tax tribunal decision brought by G4S.

Though prohibited under HMRC rules, to date, many companies have treated their employees’ parking fines as a tax deductible expense. However the situation has now been confirmed with a clear precedent for HMRC to reject any future such claims.

G4S incurred parking fines as part of their deliveries to customers. They claimed these were a business expense and so could be used to reduce its taxable profits. For G4S Cash Solutions this would have reduced their corporation tax bill by over £500,000, but the first-tier tribunal ruled in HMRC’s favour.

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.

If you have any queries about allowable business expenses, please do not hesitate to contact our team at Morrell Middleton.