recovering input VAT

recovering input VAT

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We have been approached by a local sports club, and asked if we would like to sponsor their kit. Rather than handing them a cheque, can we buy the kit, suitably displaying our logo and hand it over to them, claiming the input VAT element of the costs on our VAT return?

The club operates in a geographical area that is of interest to us, apart from that we have no connection to the club or any of its memebers.

robert smith

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By nathanhamill
27th Jul 2007 10:25

Advertising?
If this is advertising then the VAT should be reclaimable.

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By theaardvark
27th Jul 2007 10:58

Business Gift Rules
When determining entitlement to recover input VAT, you must look at the immediate use to which the purchase is put and not the motivation that drives the action (BLP Group ECJ Case).

In this case, the football kit is purchased with the intention of giving it, as a gift, to the football club. This is done for a business purpose so input VAT can be claimed. However, if the value of the gift exceeds £50, output VAT on the cost value must be declared when the gift is given, effectively negating the claim to input VAT.

If the cost of adding your logo, etc., to the kit is separate to the cost of the purchase of the kit, It may be possible to argue that it does not form part of the cost of the gift and that output VAT need not be declared on that part. This would, at least, give you deduction of input VAT on part of the total cost. However, it is be no means certain that HMRC would take the same view.

Hope that helps.

Paul Taylor
Senior VAT Consultant
Dains

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