August 2, 2018
Accountancy Expertise – here to answer your questions to help you run a successful business.
We'll be posting frequently asked questions and answers. Can’t find the answer to a question you're looking for? Get in touch at email@example.com one of our expert accountants will be happy to help. #AskTheAccountant
Question: I have recently been asked if I’d be interested in sponsoring a UK Rugby 7’s team. They play for a high level league in the UK and tour internationally. I wondered if there are any advantages to such an activity from a tax perspective?
My understanding is that anything spent will come off the bottom line so unless I perceive a value to the exposure i.e. it will bring more business in, there is no advantage or way I can offset it against anything?
Expert Answer: Any sponsorship cost would come off the bottom line. In order for it to be tax deductible as well, the company name will need to be displayed on the kit or at the ground where it is played. That’s pretty normal though.
If you can’t show that there is a commercial benefit for you, HMRC would say it should be added back onto your profit as it would serve no business purpose. It is worth having a basic formal agreement with the club so that HMRC can see that there is a business-like framework behind it if they ever asked to see it.