No one likes parking fines. However, when you pay a ticket against the service to your customer. In such a case, you should be provided a tax deduction on private parking fines.
Possibly, your business might use vans to deliver goods and your driver unintentionally needs to park the van on double yellow lines. Consequently, you are charged a penalty charge notice (PNCs) by police or local authority. You request your drivers to avoid illegal parking, but they have no choice as they have to do it for better customer service.
So in such a case, you might ask, is there any tax deduction for private parking fines?
No, as G4S found out after claiming it from the Tax Tribunal in April 2016.
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The G4S Case:
As per the tax laws, there is no prohibition on fine deduction. Courts can decide whether there is any way to avail tax deductions on a fine or not.
HMRC says that the decision taken in the Court of Appeal in Alexander von Glehn Ltd has highlighted that:
- Levying fine is a kind of punishment for a taxpayer
- The legal policy behind this imposition would be weakened if any tax relief is provided
G4S has no dispute with such a principle. However, it argues that PNCs for breaking parking laws are different in nature to charges incurred in the von Glehn case. In the latter case in the 1st World War, a company was charged for exporting goods to their enemy. As a punishment, they were fined £3,000 at that time. G4S claimed that their parking fines are significantly different in the nature of public policy issues arising from the export of goods to the enemy.
The tribunal disagreed with G4S. As PNCs aim to punish taxpayers and the payment is for the breaking of the law, not for the purpose of trade.
Despite all, there are still some exceptions where tax deductions on private parking fine can be availed:
- If PCNs are attached to employees’ cars at the time of the offense. The parking fees are paid by the business. The employee has to pay tax as employed income.
- If a car has exceeded the time of a private car park and the fine arises due to it. This is the excess charge payable to the car park service provider. It’d be allowable if it’s exclusive for trade purposes
Quick Sum Up:
Hopefully, you have got enough information about tax deductions for private parking fines. In addition, you have also found out the G4S case to get corporation tax relief on parking fines. How and why the tax tribunal rejected its claim, agreeing with HMRC. We have covered it all in this short blog.
To discuss tax and tax issues, reach out for expert advice.
Disclaimer: This blog post provides a brief overview of the topic