No tax deduction for sponsorship

A recent case before the Court of Appeal has determined that a particular company was not allowed tax relief on their sponsorship of a rugby club, as there was “duality of purpose”. The payments in question were posted to “marketing and advertising” in the company’s accounts. In order to secure tax relief against trading profits, the expense must be incurred “wholly and exclusively” for the purpose of the trade. In this case, the problem was that the rugby club was in financial difficulty and the judges held that the payments by the company Interfish Ltd were intended to provide financial support as well as advertising. This decision does not mean that all sponsorship payments will be disallowed - just those made under similar circumstances.

Note that where the club in question is established as a Community Amateur Sports Club (CASC) to benefit the local community, the latest Finance Act now specifically allows a deduction against company profits for donations from 1 April 2014 onwards. This tax relief is in line with the relief for corporate donations to charities.

Home | Contact us | Site map | Accessibility | Disclaimer | Help |

© 2022 Harris & Co. All rights reserved. We use cookies on this website, you can find more information about cookies here.

Harris+Co is a trading name of Harris & Co Limited, which is a limited company registered in England & Wales: No. 8935187, Registered Office: Marland House, 13 Huddersfield Road, Barnsley, South Yorkshire S70 2LW. The term partner indicates a principal of Harris & Co Limited who is not in partnership for the purpose of the Partnership Act 1890. A full list of principals’ names is available at the Registered Office. Registered to carry on audit work in the UK and regulated for a range of investment business and consumer credit activities by the Institute of Chartered Accountants in England and Wales. Details about our audit registration can be viewed at for the UK under reference C003785105.