CORPORATION TAX - 31.05.2016

Are parking fines tax deductible?

For some businesses, parking tickets and fines can amount to a significant annual cost. For example, in G4S Cash Solutions (UK) Ltd v HMRC 2016 , it was made clear that G4S (G) incurs in the region of 10,000 parking fines each year. Could it deduct these fines from its taxable profits?

HMRC says no. HMRC’s long-standing view is that no tax deduction is allowed for parking fines. Therefore, G was denied a corporation tax deduction for its parking fines by the tax tribunal. Note. There is an exception to this where the fine was incurred by the employee and the company pays it on their behalf. In such cases the company can get a deduction but the employee is taxed on it as earnings instead.

But… If the “fine” is from a privately run car park rather than a local council then it should be tax deductible if it was incurred on company business. This is because it’s a contractual arrangement and not a penalty levied by a public body.