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Motorsport Sponsorship Query

Claiming motorsport sponsorship or car entry costs as an ltd in the motorsport buisiness

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i have a 1 employee (me) ltd company offering mechainical and driver(hgv) services to the motorsport industry mostly and was looking at the possibilty of sponsoring a car (mostly driven by myself) but i am getting confused if this would be a deductable expence. would the fact that the ltd is directly involved in the building/transporting and running of racing cars allow the sponsorship costs to be claimed or could the car be purchased, maintained and entered by the ltd company and the drive in that car be offered to myself for free or a small fee ?

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Psycho
By Wilson Philips
16th Nov 2019 09:47

What is the exact nature of the proposed sponsorship?

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By Tax Dragon
16th Nov 2019 11:08

Sponsor a car? How much would you pay it? What would it have to do?

If you mean, can your company have its logo on its car, yes, it can. You have a personal benefit in kind from being able to drive the car, however it is painted.

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RLI
By lionofludesch
16th Nov 2019 11:18

Your weakness is that you're the driver. HMRC will assert that you do it for recreational reasons.

There was a case a few years ago where a taxpayer won, based on his evidence that he didn't really like motor racing and preferred sailing. Forgotten the name of it.

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Replying to lionofludesch:
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By Tax Dragon
19th Nov 2019 10:08

You mean Crown and Cushion Hotel (Chipping Norton) Ltd.

A couple of great quotes from this case:
'For the purposes of the trade' does not means 'for the purposes of the taxpayer';
[The] characterisation [of an expense as having] a trade or private purpose is a matter for the tribunal, not for the taxpayer.

I presume we can read "tribunal" as "accountant", in the first instance.

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Replying to Tax Dragon:
RLI
By lionofludesch
19th Nov 2019 10:57

Tax Dragon wrote:

You mean Crown and Cushion Hotel (Chipping Norton) Ltd.

No. McQueen - as Dulls remembers for me.

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Replying to lionofludesch:
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By Tax Dragon
19th Nov 2019 11:08

So I see - CCH (CN) Ltd references McQueen (and his sailing) in a corporate context, which a) threw me (due to skimming not reading) and b) is curious enough for me to set aside the time to read it now, rather than skim!

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RLI
By lionofludesch
19th Nov 2019 11:19

Garelochhead itself is a bit of a dump but we went on holiday a few miles there this year.

We had a day trip to Dunoon.

Five miles as the crow flies.

Fifty eight by road over the Rest and Be Thankful.

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By JDBENJAMIN
16th Nov 2019 12:36

I am a lifelong hardcore fan of motorsport, and am well aware that nearly all 'sponsorship' is a sham except at the very top levels of the sport. The business names that appear on cars at most levels of the sport always have close connections with the driver. HMRC know this too, and costs incurred by companies to buy and run racing cars are nearly always a taxable benefit on the director. There are a few cases where the taxpayer has successfully argued otherwise, but you will need proper advice on that, so start by asking your own accountant.

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RLI
By lionofludesch
16th Nov 2019 14:03

Here's the killer point - how much business, if any, have you got from the advert ?

If none - a Tribunal is going to be sceptical about you saying it's for a business purpose. Sure - you hoped it would get you business but did you actually believe that ?

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Replying to lionofludesch:
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By Accountant A
16th Nov 2019 14:09

lionofludesch wrote:

Here's the killer point - how much business, if any, have you got from the advert ?

If none - a Tribunal is going to be sceptical about you saying it's for a business purpose. Sure - you hoped it would get you business but did you actually believe that ?

Does he think he's doing it for business? Fuzzy duck, as Rev Spooner used to say.

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RLI
By lionofludesch
16th Nov 2019 14:12

It does no harm to be honest with yourself before making a point to HMRC.

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By Tax Dragon
16th Nov 2019 17:34

I find myself agreeing with JD. The company's probably going to get its deduction, because providing taxable benefits to directors is - normally - a business purpose. More info would be good, but really the OP would do well to appoint a good accountant.

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Replying to Tax Dragon:
RLI
By lionofludesch
16th Nov 2019 17:44

In the absence of detailed information, I agree.

The other possibility seems to be that the expenditure is the director's - but that seems a less likely scenario on the information so far.

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By The Dullard
19th Nov 2019 10:44

McQueen got away with it, but he was self-employed.

https://www.bailii.org/uk/cases/UKSPC/2007/SPC00601.html

From memory, Interfish might be worth a little Google too.

Incidentally, how come people are more helpful to freeloaders who have interesting questions?

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Replying to The Dullard:
RLI
By lionofludesch
19th Nov 2019 10:59

The Dullard wrote:

Incidentally, how come people are more helpful to freeloaders who have interesting questions?

It's because the questions are interesting.

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