Formula One and the Red Bull Racing 2021 cost cap.

Many will know about this current situation in F1 and the new budget cap, to restrict teams spending to try and make the sport a level playing field for fair competition between all teams.

It was announced on Monday that Red Bull Racing had breached the 2021 cost cap by a minor amount (less than 5% over the cap). This has led to many Hamilton fans demanding Max Verstappen be stripped of the 2001 Championship and it be awarded to Hamilton. This a knee jerk reaction before they even know any details. Just shouting RBR are cheats.

The latest information casts light on the real reason for this supposed breach of the cap.

It is due to a disagreement between the FIA ​​accountants and RBR over whether Adrian Newey is an employee of RBR.

The FIA ​​says he is not an employee because he sends his costs from his one-man company RACING SERVICES LIMITED to RBR, and therefore his costs belong to the budget cap. RBR says he is an employee and they have therefore placed his costs with the three highest-earning employees, and they are not counted in the budget cap.

The European GAAP describes what is meant by employee. Someone who works with his one-person company for a large company and does that more than two days a week for an extended period and earns at least 2/3 of the minimum wage as an employee of that large company.

From an RBR perspective they are right and he is a RBR employee. In addition according to EU tax laws and UK HMRC rules if an independent contractor works solely for one organisation and is only paid by that organisation then they are considered an employee.

But the FIA ​​maintains that he is not a RBR employee as he is not on their payroll but they pay his monthly bills. This isn't about a loophole, let alone cheating. This is purely about the interpretation of the word "employee".

The FIA ​​accountants and RBR will have to discuss this extensively about who is right with regard to "employee."

It seems the FIA again have written their rules open to interpretation. RBR are correct by the laws govening them, in Austria where they are registered, and in the UK where they operate. Therefore the FIA is legally wrong. Without including Adrian Newey's wages in the accounts RBR are within the Budget cap. The wages of the top 3 earners in an F1 team are not included in the cap. Therefore this purely comes down to the FIA's interpretation of what an employee is. And I think if this were to go to court they would lose against RBR as the FIA is registered in France, so their interpretation of an Employee should fall within the EU definition.
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