There are two parts to my question. Firstly, I have a client that received a substantial sum of money from a wealthy benefactor in the 2017/18 tax year to support them as a competing winter sportsman. There is no connection between the benefactor and my client other than the benefactor having an interest in my clients sporting activity. The money was given with no 'strings attached' and my client was not required to do anything in return for the individual. My initial thought was that the money was some form of sponsorship but given my client has to do absolutley nothing to promote the benefactor or give any of his time in return I am slowley coming to the conclusion that this income may not be taxable in my clients hands?
The second part of the question is that my client has now retired from their winter sport and has moved into a coaching capacity. He is coaching at an elite level. The same benefactor has now committed to pay my client direct a significant sum for 2 years for him to use that money as he sees fit to support elite athletes he is coaching or invovled with. This money will be used to pay indivduals that support the elite athletes for their services as well as my client taking an amount to cover the services they provide to the athletes. The athletes will not be receiving any of the money. Once again the benefactor wants nothing in return and we have a email from the benefactor referring to the commitment to pay this money as a gift. My question is similar to the first part, is income tax payable by the receipients of this money that my client pays to them? My client will decide who gets the money and how much they get paid form the sum.
I haven't addressed the Inheritance Tax issues as it is very likely that the amount given by the benefactor is out of normal income. The benefactor is extremely wealthy!
Any help would be much appreciated.