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Red Bull's F1 cost cap breach occurs in four key areas

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The Red Bull Formula 1 team’s breach of cost cap regulations totaled nearly $1.8 million and spanned four key areas. understands.

A recent report from the FIA ​​on the accounts of 10 teams for 2021 revealed that nine of them fell short of the $145 million applied cost limit, with only Red Bull exceeding it, committing a so-called “minor” breach.

Team principal Christian Horner was in Singapore when rumors first surfaced that his team had not exceeded the cost cap, but just an hour after Max Verstappen won the 2022 Drivers title in Japan, Horner received a call to confirm the violation had been committed. He believes the call was made by Shaila-Ann Rao, the FIA’s interim general secretary for motorsport, and former Mercedes general counsel.

The next day, news of the breach was released (along with a procedural, paperwork breach from Aston Martin).

understood by The FIA ​​is believed to have made a proposal to Red Bull to resolve the breach under the terms of the Agreed Breach Agreement.

This means Red Bull pleads guilty and cannot appeal, but they can take the case to a Tribunal if they reject the ABA for a final decision on the matter.

Red Bull cost limit violation

Red Bull was nearly $4 million above its initial $145 million cost cap figure before multiple factors combined to push them to over $1.8 million. of resources.

These include

  • Internal costs related to gardening leave and sick pay – $800k
  • Meal expenses – $1.2 million

Other areas that have pushed the team over the limit include the use of spare parts and the tax situation with UK authorities, which has meant the team has gone from under $4 million to over $1.8 million – what appears to be a release of around $5.8 million.

Violation dump

Internal costs are said to include former head of aerodynamics Dan Fallows, who stepped down to take up the position of technical director at Aston Martin in mid-2021. of source.

As is normal in situations of personnel switching between teams, a well-located resource went on garden leave for a while, although Fallows understood that the business had moved to the Red Bull Advanced Technologies branch – away from the racing unit.

Red Bull Racing did not include Fallow in their calculations, as it is believed the FIA ​​did.

The remainder of the costs was allocated to the standard sickness allowance for team personnel. he also understands that some of the overspend is due to spare parts and the rules regarding them have been reclassified.

Parts designed for 2021 spec cars that cannot be transferred to the new type were previously exempted, but in June this year the rule was changed so that these parts are included in the budget total.

Meal expenses added $1.2 million to total overspend, and other minor expenses pushed the total toward the upper limit.

Despite rumors to the contrary, it is not clear that Adrian Newey’s salary was a reason for the violation.

Sources familiar with the matter believe Newey’s salary would be exempt from inclusion in the cost cap as he is one of the top three earners on the team.

tax status liquid

The biggest part of overspending Regarding possible tax credits and refunds from UK tax authorities – Her Majesty’s Revenue and Customs Authority (HMRC).

Known as the Research and Development Expenditure Credit (RDEC), this credit can be requested by contractors who have been hired by a larger firm for R&D and received grants or subsidies, or whose expenses exceed a program benefit cap.

A portion of the loan, which is calculated as 13% of qualified R&D expenditures, can be used to avoid some tax liabilities.

It is believed that Red Bull expected a discount from HMRC, but this did not materialize and added $1.4 million to the budget for the year.

Again, If it understands that the situation is volatile and Red Bull can prove they expect some form of reduction from HMRC, the FIA ​​will look to that figure with leniency.

Horner will be at the Team Managers’ press conference Saturday morning at the United States Grand Prix, where talks are underway to reach some sort of deal with the FIA.

© Getty Images / Red Bull Content Repository