Can parking fines and penalties be claimed as business expenses? Can a business off-set those against taxable profits?
A first tier tax tribunal case between HMRC and G4S Cash Solutions (UK) Limited provided clarity on the treatment of parking fines and whether they are allowable business expenses.
The company,G4S transports cash on behalf of it’s customers and empties/restocks cash machines all over the country.
During 2008 and 2010, G4S incurred about 10,000 penalty charge notices (PCNs) a year issued by local councils. The parking fines were in relation to penalty charge notices received from local councils, incurred for contraventions including:
- loading/unloading in restricted areas
- stopping on red routes and bus stops
- parking over footpaths
The company reflected those fines as allowable business expenses in the corporation tax returns.
The company had the following arguments to justify the tax treatment for the fines:
- Those fines were incurred wholly and exclusively for the purposes of their trade
- The company staff needed to park in restricted areas for safely reasons. The vehicles were to remain close the cash machines
- The staff tried to ensure legal and safe parking as much as possible
- The company disallowed the fines which were found to be incurred unnecessarily
The tribunal concluded that GS4 were not allowed to treat the parking fines as tax deductible because:
- they were not incurred ‘wholly and exclusively’ for the purposes of the trade, and
- they were issued due to breaches of the law, which are never tax allowed
Comments from HMRC:
“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.”
The above makes it clear that fines and penalties incurred due to the breaches of law are not allowable business expenses.
If you like any help to understand more or to know if certain expenses can or can’t be claimed for your business, please contact us