Motor racing sponsorship was tax deductible

 

In order for an expense to be tax deductible against business profits it must be incurred “wholly and exclusively” for the purposes of the trade.

In a recent tax case a hotel owner near Silverstone sponsored his grand-daughter’s career as a racing driver by making payments through his company. The argument was that this would promote the motorsport credentials of the hotel, re-branded as Silverstone Hotel. The granddaughter was well known in motor racing circles and her endorsement of the hotel was designed to promote the company’s business.

HMRC sought to disallow the expense on the grounds that there was a “duality of purpose” and consequently not incurred wholly and exclusively for the purposes of the hotel trade. However the Tax Tribunal allowed the company’s appeal and consequently the payment was tax deductible.

It’s worth noting of course that this is an extraordinary decision and should not be relied on as a broader rule. Under scrutiny from HMRC it is still highly likely that expenses like this will be penalised, even if the circumstances are similar.


Robinsons London Accountants – accounting done differently

At Robinsons we work hard to understand, communicate, interact, engage and, above all, to connect with each and every one of our clients – from entrepreneurs to established businesses, from every area of London and from every sector you can imagine.

MEET THE TEAM to find out more about Joseph, Richard and Matthew.

For us, it’s all about building long-term relationships and really getting to know what makes you tick and what your goals are. We do all this using the latest accounting software. We also have great packages to help start-ups. Remember, we care about your business, not just your accounts.

 

Leave A Comment

By continuing to use this site, you agree to the use of cookies. more info

The cookie settings on this website are set to "allow cookies" to give you the best browsing experience possible. If you continue to use this website without changing your cookie settings or you click "Accept" below then you are consenting to this.

Close