Salary cap, Shmalary Cap

[Mike Harte]

Originally Posted by S griffin

Seems the FIA are ready to make a deal with Red Bull over the breach:

https://www.motorsport.com/f1/news/r...ment/10387108/

This is very similar to how the dodgy Ferrari engine situation was sorted a few years ago. Not going to please other teams this

I don't believe that that is the case here. See last paragraph.

The article just states that they Red Bull are going to admit their error, and will accept whatever penalty the FIA hands down. This is exactly what happened with Williams, who accepted the FIA's findings and paid the penalty of $25,000 that was imposed.

It just means that Red Bull will not take an appeal to the next stage, and in due course the FIA or Red Bull will publish what the transgression actually was, and what the penalty is.

[Sodemo]

It will almost certainly be a slap on the wrist, nothing meaningful.

[S griffin]

I think there is a chance they will get quite a hefty fine. Break the financial rules, get some of your finances docked

[Sodemo]

Originally Posted by S griffin

I think there is a chance they will get quite a hefty fine. Break the financial rules, get some of your finances docked

Which makes a mockery of the ruleset. If you can just pay a fine to overspend, what is the incentive to not overspend?

Surely the punishment needs to be a sporting one?

[Adam43]

Originally Posted by AnnoyedMoose

It's a bit like assuming someone would not pay their mortgage to go on holiday.

This is the exactly the analogy people are making. If you have a limited budget you can’t do that. If you have more though you can have that nice holiday in Adu Dhabi.

[greentrumpet]

Originally Posted by Sodemo

Which makes a mockery of the ruleset. If you can just pay a fine to overspend, what is the incentive to not overspend?

Surely the punishment needs to be a sporting one?

FIA are hardly likely to want to undo last years fix.

[PhilipR]

According to this article https://racingnews365.com/red-bulls-...our-main-areas RB has misacounted for around 6 million dollars

They have submitted a return of 140 million but it seems there were an extra 6 million that should have been included in cap - Article explains the areas this has happend
It also seems they were expecting a tax rebate from HMRC that they did not receive

6 million is quite a lot to "misaccount for" and the other UK teams did not have such issue...it is all quite intricate and interesting

[PhilipR]

Also what intrigues me, if the article is in fact correct, why submit 140 million spending? Your job as a team is to maximise spending and performance so leaving 5 million on the table unused does not sound smart to me expecially when that money could have been used in developing this year's car.

It would make me think that they knew they were playing with the finances and gave themselves some spending levy through smart(or not so smart) accounting so they do no end up with a major breach or close to one if it does not work out

[Sodemo]

Originally Posted by greentrumpet

FIA are hardly likely to want to undo last years fix.

I don’t even think F1 is capable of that, over the years F1 and the FIA have always done all they can to save face, often flying against all logic and good reason. No I think the sporting punishment should be enacted on the upcoming season, it’s the only thing they can do if they want to save face, I mean it’s not the right thing to do, but it IS the “FIA thing” to do.

[P38 in workshop]

I don't know if it makes any difference,but the BBC recently reported that Dietrich Mateschitz has died this evening.

[Teretonga]

Originally Posted by P38 in workshop

I don't know if it makes any difference,but the BBC recently reported that Dietrich Mateschitz has died this evening.

https://www.theguardian.com/sport/20...g-term-illness

[chillibowl]

Rip! Huge contribution to the sport we love!

Can’t imagine it’s good news for the team or the teams in its current guise.

[bathurst77]

RB are everywhere f1 f2 rally v8 supercars, bikes, planes, boats. I cant see anything changing for the next few years

[peebee2]

So, it seems that the major problem is that the three top (excluding driver) salaries are excluded. Newey is within that - but he's a contractor, not a direct employee.

Therefore RB excluded him and the FIA have put him back in, and taken the next highest out - who is obviously significantly cheaper.

What are people's thoughts on that?

[Mike Harte]

Originally Posted by peebee2

So, it seems that the major problem is that the three top (excluding driver) salaries are excluded. Newey is within that - but he's a contractor, not a direct employee.

Therefore RB excluded him and the FIA have put him back in, and taken the next highest out - who is obviously significantly cheaper.

What are people's thoughts on that?

This was discussed several pages ago. It would seem as though the FIA are taking the same line as the Inland Revenue who consider that a "contractor" who receives the bulk of their income from a single source should be treated as an employee and should therefore be subject to PAYE and NIC.

This is not something new, however HMRC are actively pursuing this far more rigorously than in the past. A friend of mine was caught up in this back in the 80s.

[peebee2]

Originally Posted by Mike Harte

This was discussed several pages ago. It would seem as though the FIA are taking the same line as the Inland Revenue who consider that a "contractor" who receives the bulk of their income from a single source should be treated as an employee and should therefore be subject to PAYE and NIC.

This is not something new, however HMRC are actively pursuing this far more rigorously than in the past. A friend of mine was caught up in this back in the 80s.

I know it was, but it's not like HMRC at all. They aren't disputing the right of RB to do it like that, just whether they can count him as one of their top three.

I suspect strict legal definitions are going to come into play here, which will end up with the FIA having to save face.

[crmalcolm]

Originally Posted by peebee2

So, it seems that the major problem is that the three top (excluding driver) salaries are excluded. Newey is within that - but he's a contractor, not a direct employee.

Therefore RB excluded him and the FIA have put him back in, and taken the next highest out - who is obviously significantly cheaper.

What are people's thoughts on that?

My thought - it all comes down to whether there was some other financial benefit for Red Bull by employing the contractor services of Newey as opposed to a direct employee.

[chillibowl]

Originally Posted by peebee2

What are people's thoughts on that?

I would think that if they interpreted it this way in 2021 then they would have spent up til now in 2022 interpreting the same way they did in 2021?

If so and they can’t find a way to reduce expenses for the remainder of this year (I don’t know how possible that is) then they could be looking at two consecutive years of breaches?

[peebee2]

Originally Posted by chillibowl

I would think that if they interpreted it this way in 2021 then they would have spent up til now in 2022 interpreting the same way they did in 2021?

If so and they can’t find a way to reduce expenses for the remainder of this year (I don’t know how possible that is) then they could be looking at two consecutive years of breaches?

Exactly - might even have problems for 2023 with length of contracts and notice periods etc.

[Mike Harte]

Originally Posted by crmalcolm

My thought - it all comes down to whether there was some other financial benefit for Red Bull by employing the contractor services of Newey as opposed to a direct employee.

Yes, it saves the company employer NIC at the very least.

[LC2guy]

Originally Posted by chillibowl

I would think that if they interpreted it this way in 2021 then they would have spent up til now in 2022 interpreting the same way they did in 2021?

If so and they can’t find a way to reduce expenses for the remainder of this year (I don’t know how possible that is) then they could be looking at two consecutive years of breaches?

Just skip the rest of the season, titles already won, theres a saving right there ....

[chillibowl]

thinking more on it...as Mike alludes to, this has long been an issue for sub contractors, those that contract their services, and tax authorities, not just in the UK but everywhere really, deal with this issue so frequently as to consider it common place issues.

add to that the nature of teams' regular dealings with outside suppliers at both arms and non-arms length terms then surely the issue of what constitutes a employee, contractor, supplier etc is of utmost importance.

frankly im surprised any ambiguity was left in the budget cap agreements concerning the definition of these categories in the first place.

out there speculation part:

i add the arm-length concern in there because for all we know Newey's retainer (to either himself or whatever corporate entity he uses to shelter his income) is set at favourable terms based on his long term relationship with RB and knowledge that he has other 'non f1' income streams.

and by favorable i mean the RB racing team could in effect be paying Newey (or his corp) significantly less then another team would pay for one of the top minds in the game.

rather, its entirely possible that even with Newey's remuneration being added back to the mix, RB racing have still found a loop hole that still shelters them from a 'major' infraction according to what is potentially looking like an 'intentionally' poorly drafted set of budget rules?

[chillibowl]

Originally Posted by LC2guy

Just skip the rest of the season, titles already won, theres a saving right there ....

that would be an interesting scenario.

what happens when a team fails to arrive for a race weekend? i seem to recall mention that in the (Bernie) past FOM had an obligation for at least 10 teams to arrive at an event in order to uphold his commitment to the venues/hosts?

[peebee2]

Originally Posted by Mike Harte

Yes, it saves the company employer NIC at the very least.

Assuming that he is employed in the UK by a UK company of course...

In reality HIS company will be contracted because HE wants it to be that way.

[Mike Harte]

Originally Posted by peebee2

Assuming that he is employed in the UK by a UK company of course...

In reality HIS company will be contracted because HE wants it to be that way.

Look, I know you have a huge need to be right all the time, but might I suggest that you read the question that was posed ever so slowly so that you are able to fully comprehend what was actually asked. crmalcom asked what the benefit to Red Bull was, and I answered the question about that benefit to Red Bull. It matters not a jot about where Newey's company is based!

However, dependent on Newey's company's turnover, VAT may come into the equation.