Season tickets (football)

Accounting for season tickets (football)

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Hi!

I have a client who has/about to purchase "executive hospitality" season tickets (10 year license agreement) for a premier league football club.

The annual fee could be classed as business entertainment in the P&L, no vat claimed, and no CT deduction.

However, a colleague had mentioned putting as an asset on the balance sheet (again no vat claimed and no capital allowances).

What is your opinion here?

And if an asset, how would you cost/depreciate if annual cost is say £2,000.

Replies (18)

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paddle steamer
By DJKL
24th Oct 2016 16:47

If an asset surely a prepayment.

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By Accountant A
24th Oct 2016 16:53

Err, why would it not be an asset? Assuming that the team in question did not suffer a significant decline it its fortunes and end up in a lower league, I would have thought an equal allocation of the cost to each year would be a reasonable way to amortise.

PS I assume that the annual cost is more than £2,000 - a lot more

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Replying to Accountant A:
paddle steamer
By DJKL
24th Oct 2016 17:11

Because whilst it is possibly assumed that all payments for x years are made at outset there may be differing payments within such agreements-having not read the agreement I thought a qualification was prudent.

My point was that if it is a full payment in advance, covering all the cost for x years, it is a prepayment.

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By CA-London
24th Oct 2016 16:57

Thanks for the responses.
Yes it is more like £5k per season per seat.
So you would capitalise at one seasons cost? then amortise by the full amount?
Leave £1?

Or would you put the 10 years of £5k, so £50k as an asset and amortise £5k each year? (even though the payments each year are the £5k)

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Replying to CA-London:
By JCresswellTax
24th Oct 2016 17:03

CA-London wrote:

Thanks for the responses.
Yes it is more like £5k per season per seat.
So you would capitalise at one seasons cost? then amortise by the full amount?
Leave £1?

Or would you put the 10 years of £5k, so £50k as an asset and amortise £5k each year? (even though the payments each year are the £5k)

Surely your answer to that will be found on the contract between your client and the football club.

It's hardly likely to be a matter of choice!

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By WhichTyler
24th Oct 2016 17:08

eh?
Is there an initial payment as well as the annual ones. If its just an annual payment ("even though the payments each year are the £5k"), this looks more like a lease than an asset, so why would you capitalise it?

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By CA-London
24th Oct 2016 17:28

No initial payment.

To clarify it is a LICENSE AGREEMENT, for ten years with an annual payment of £5k.

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Replying to CA-London:
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By WhichTyler
24th Oct 2016 18:42

So what is there to capitalise? If the football season is not co-terminous with the accounting period, you might treat some of the annual payment as a prepayment (so a current asset).

Otherwise are you suggesting that simply the right to pay £5k/year is worth something?

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Replying to CA-London:
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By Harrison88
25th Oct 2016 10:19

Is there a get out clause? Otherwise you would have one side as a liability (i.e. you must make that payment every year for five years) and the other an asset. Each year you offset the ticket payments against the liability and use depreciation to reduce the asset.

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Replying to Harrison88:
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By CA-London
25th Oct 2016 10:26

Harrison88 wrote:

Is there a get out clause? Otherwise you would have one side as a liability (i.e. you must make that payment every year for five years) and the other an asset. Each year you offset the ticket payments against the liability and use depreciation to reduce the asset.

I do not believe there is, and your suggestion could work. However it is stated in the agreement that the annual cost is likely to increase in region of up to 5% potentially some years.

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Replying to CA-London:
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By Disabled Accountant
31st Oct 2016 15:28

CA-London wrote:

No initial payment.

To clarify it is a LICENSE AGREEMENT, for ten years with an annual payment of £5k.

It's a £5k a year revenue payment, presumably for business entertaining.

If the club in question is Manchester United then HMRC may well demand an independent psychologists report regarding the sanity of anyone wanting to watch them for the next 10 years.

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By Accountant A
24th Oct 2016 18:26

I read as an upfront payment for 10 years so obviously got that wrong.

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By Mr_awol
25th Oct 2016 17:24

Is there a get out clause? Can you sell it on to another party (as in the right tot he season tickets - not individual matches).

I doubt it will be something you could capitalise. As others have said, you might end up with a prepayment - and might well end up with an operating lease commitment, but read the conditions and it should be fairly obvious.

Mine is definitely not an asset - despite the relevant club currently occupying joint top spot with two others in the prem.

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By Duggimon
28th Oct 2016 10:42

It's an operating lease, not an asset. P&L, no capitalising, no tax relief.

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Replying to Duggimon:
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By CA-London
31st Oct 2016 14:28

Duggimon wrote:

It's an operating lease, not an asset. P&L, no capitalising, no tax relief.

and VAT?

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7om
By Tom 7000
31st Oct 2016 13:33

dont forget to put it on your P11d....

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Replying to Tom 7000:
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By CA-London
31st Oct 2016 14:27

Tom 7000 wrote:

dont forget to put it on your P11d....

really? questionable don't you think

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Replying to CA-London:
paddle steamer
By DJKL
31st Oct 2016 15:09

CA-London wrote:

Tom 7000 wrote:

dont forget to put it on your P11d....

really? questionable don't you think

Certainly questionable if for say Sunderland, absolutely no BIK delivered ,in fact should get a tax credit for going to watch.

On the plus side next year they will be cheaper and supporters will get to visit some interesting and exotic places.

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