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Q: I regularly compete in affiliated showjumping and my husband and I run our own furniture retail business, with two regional stores and an online portal.
We often place adverts in the schedules and programmes using the company name and website to gain new customers.
My lorry is branded with our name and logo, but there’s never been any financial or formal sponsorship deal. I would like to take it a stage further in the form of business sponsorship of my showjumping.
What are the chances of this being allowed for tax relief?
LA, Hertfordshire
The March 2007 case of McQueen vs Revenue and Customs has given hope to those contemplating sponsorship arrangements, and you may well be able to gain tax relief against your showjumping sponsorship.
“This case set a precedent that means tax allowable sponsorship is a possibility,” explained Julie Butler of Hampshire chartered accountants Butler & Co.
“In order to obtain tax relief, there must be evidence of a direct correlation between sponsorship and gaining new customers. The sponsoring expenditure must be ‘wholly and exclusively’ for the business.
“The pleasure of the showjumping must be an incidental benefit of the expenditure, rather than the purpose.
“The tax office will require evidence to demonstrate a direct correlation between sponsorship and gaining new customers. The marketing advantage must not be vague and uncertain, but clear and successful,” said Julie.
“You need to put into place a formal sponsorship agreement, showing clear evidence of the sponsorship during competitions, such as attractive logo sites on your competition saddle cloth, clothing, rugs and lorry.
“You should take professional advice, so speak to the accountant who handles your furniture business, or seek advice from a tax specialist.”
Information
Butler & Co, tel: 01962 735544 www.butler-co.co.uk
Institute of Chartered Accountants www.icaew.com
Regional accountant search facility www.accountants-guide.co.uk
This article was first published in Horse & Hound (28 January, ’10)
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