How the FIA ensured cost cap 'loophole' was firmly closed

Formula 1 teams will always try to find loopholes in the regulations and make the most of these supposed 'grey areas' and the cost cap is no exception.

If your team does not do it, you can be sure the next team will, and it is part of the game, with the FIA stepping in during summer 2023 to issue a technical directive to shut one such loophole.

It concerned the use of staff and personnel in special projects and 'Applied' divisions of teams.

This has been a long-term arrangement with examples such as McLaren Applied Technologies or Red Bull Advanced Technologies as those with F1 experience try to transfer those skills to other areas, such as road cars.

The divisions of Mercedes and Red Bull have even been involved in sailing's America's Cup.

But, this arrangement could, in theory, be easily 'reverse-engineered' with those outside of F1, and thus the cost cap, using knowledge gained to help the F1 team, which is a potential breach of the cap.

To combat this, Technical Directive 45 was issued in June 2023.

It warned teams that Intellectual Property (IP) gained from projects outside the F1 operation must fall under the cost cap, and cannot come from 'free' sources within the wider company.

The transfer of knowledge from F1 to the Applied division remained permitted.

How FIA closed the loophole

On Tuesday (September 5), the FIA announced that all 10 teams were in compliance with the 2022 cost cap and thus no breaches of any kind were detected in the audits.

In the statement confirming this, the FIA alluded to the steps taken to close the loophole.

"The review has been an intensive and thorough process, beginning with a detailed analysis of the documentation submitted by the competitors," said the statement.

"Additionally, there has been an extensive check of any non-F1 activities undertaken by the teams, which comprised multiple on-site visits to team facilities and careful auditing procedures to assess compliance with the Financial Regulations.

"The FIA Cost Cap Administration notes that all Competitors acted at all times in a spirit of good faith and cooperation throughout the process."