Parking "Fine" - Allowable Expense?

Pete12

I have always understood that "fines" (where the law is broken) are disallowed for tax purposes and assumed that parking "fines" (where a driver has overstayed their allotted time rather than, say, parking on a double yellow line/pedestrian crossing) fall into this category. However, it has been pointed out to me that in this case - where a Penalty Charge Notice is issued - the "fine" is an allowable expense as it is essentially no more than expensive parking.

Opinions - especially definitive answers - are welcome.

Pete12

mrb82

Hi Pete,

i wouldn't say it was allowable as it is not incurred for the purpose of trade (not definitive answer).

I think this may help you.....

http://www.hmrc.gov.uk/manuals/bimmanual/bim42515.htm

Mr B

MarieNoelle

Hi,
in my practice we tend to allow parking fine for employees but not for directors. I don't know if there is a definite rule to support this.

T.C.

I would always say that a parking fine is allowable for an employee but not a business owner, so yes, agree with MarieNoelle!

Monsoon

My understanding is that:

Fine for parking on a double yellow = illegal = disallowable

Fine for overstaying your paid ticket = allowable (it is just an extra parking charge, albeit much higher).

See the distinction?

Edit: can't remember if the above distinction applies to directors as well as employees. I *think* it does.

Pete12

Thank you all (and anyone else who can further enlighten me).

My interpretation now is that the parking "fine" is not an allowable expense in itself, it is that payment given to an employee (really to recompense them) is an allowable expense because it is essentially extra salary, which IS an allowable expense of the business.

Thus, for a sole trader or landlord who incurs a PCN charge in the course of trade/income generating activities, the expense is....er....disallowable (?) even though it does not really involve a "trader's infraction of the law", rather it is a penalty which arises because the conditions of the agreement between the, say, City Council and the driver have been broken?

Anyone.....?

Pete12

Monsoon - the above is my response before your post (you beat me to it). Essentially, my understanding tallies with what you have said.

Anyone else?.....

T.C.

A landlord who gets a PCN fine for parking on double yellows, cannot claim this expense - I have come across that before.

[Deleted User]

I was under the impression that fines where not tax deductible whether it be for parking or not paying HMRC on time. We removed all fines on the tax comp when I worked in practice.

deanshepherd

Pete12 wrote: »

My interpretation now is that the parking "fine" is not an allowable expense in itself, it is that payment given to an employee (really to recompense them) is an allowable expense because it is essentially extra salary, which IS an allowable expense of the business.

Bang on.

Next question: Do you put it through the payroll? On the P11D? Or neither?

[Deleted User]

Pete12 wrote: »

My interpretation now is that the parking "fine" is not an allowable expense in itself, it is that payment given to an employee (really to recompense them) is an allowable expense because it is essentially extra salary, which IS an allowable expense of the business.

But if the company choose to pay it initially then claim it back from the employee's net pay then it gets cancelled out through the net wages account and doesn't actually hit the P&L.

deanshepherd

They won't be claiming it back from net pay - what's the point?

They reimbursed it because they, presumably, felt obliged to given that the employee was fulfilling their duties for them at the time.