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Not F1 but is sport sponsorship an expense for tax purposes?

If a company whether Ltd, Partnership or Sole Trader advertises on a race car and contributes towards the cost of running that team - how is the expenditure/benefit (from advertising)  accounted for?

Should costs such as race fees, maintenance costs, media administration be a single sponsorship figure or broken down into component parts?

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By DMGbus
30th Jan 2013 18:45

Garlochhead case (R S McQueen)

I believe that the following tax case is very relevant to the query (Bus & Coach operator sponsored motor racing - HMRC did not like the concept of tax relief, but held ALLOWABLE).

 

http://www.financeandtaxtribunals.gov.uk/judgmentfiles/j3132/spc00601.doc

 

 

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We had sucess in this area, but we had

 

i. Witness statments proving that people became customers as a result of the expenses

 

ii. Copies of photos etc showing the comany logos etc

 

iii. The directors were not interested in what was being sponsered!

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By ecojet
30th Jan 2013 21:12

Thanks DMGbus and arthurphillips

i seems a little extreme - particularly at club racing level. Red bull probably don't have to do this!

ii is logical

iii is a pity but if they see a return on the investment perhaps they'll come around.

 

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31st Jan 2013 11:45

Directors' disinterest

Ecojet, you might be missing the point slightly about the directors' disinterest in the thing that is being sponsored.

The expense will fail - if it's going to fail - on the grounds of duality of purpose.  In order to make 'duality of purpose' stick, HMRC will want to attach a purpose to the payment other than a strict business purpose.

If in your case the director has a personal interest in the sport - perhaps as as a fan, or maybe because a family member involved - then HMRC have an open goal.  It's better if the director demonstrably has no enthusiasm whatsoever for the sport, except as something that is a useful vehicle (sorry!) for promoting his business and boosting its profits.

 

 

 

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