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Your business makes lots of deliveries by van to clients and quite often drivers have to park on double yellow lines as there is no available parking nearby. The result is quite a lot of Penalty Charge Notices (PCNs) issued by the local authority or the police. Your drivers are instructed to avoid parking in such locations but they often have no choice if the business is to provide an efficient service to clients. Any chance of getting a tax deduction?
The short answer is no. The long answer is also no as G4S has found out in a lengthy judgement released by a Tax Tribunal in April 2016.
Tax legislation contains no specific prohibition for the deduction of fines so the courts have had to decide from time to time whether any principles apply for deciding whether a tax deduction is available. HMRC argued that the decision made in the Court of Appeal in Alexander von Glehn Ltd gave rise to a principle that:
G4S did not dispute the existence of this principle but claimed the PCNs they incurred for parking infringements were rather different in character to the penalty incurred in the von Glehn case. In that case the company was fined in the First World War for exporting goods to enemy territory. The fine was £3,000 - a considerable sum then and clearly meant to punish. G4S claimed its PCNs were of a different character from the public policy issues arising from 'trading with the enemy'.
The Tribunal did not agree with G4S. The purpose of the PCNs is to punish the taxpayer. The payment was at least in part a payment to meet its obligation to pay the fines as a consequence of breaking the law rather than being incurred for the purposes of its trade.
Despite this case, there will be instances where a tax deduction is available:
The EU referendum result will, of course, have significant long term economic consequences for the UK and many areas of law will need to be adapted to the new era. What are the possible tax consequences of the UK ceasing to be a member of the EU?
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It has taken a long time to sort out but after several years of lobbying by professional accountancy bodies and others, the government has provided a sensible set of rules on the question of whether directors are required to be enrolled into an employer provided pension auto enrolment scheme. The latest development has been the issue of legislation to provide the company with the ability to opt to exclude directors from auto enrolment. This will provide comfort for many employers; particularly small employers who have yet to go through the auto enrolment process.
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On 6 April 2016 a new allowance - the Savings Allowance - was introduced into our tax system. The Savings Allowance applies a new 0% rate for up to £1,000 of interest receipts for a basic rate taxpayer and up to £500 for a higher rate taxpayer.
This publication is published for the information of clients. It provides only an overview of the regulations in force at the date of publication and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this publication can be accepted by the authors or the firm.
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