Tax Efficient Motorsport Advertising

[OMS]

Hello,
I'm not sure if this is the right forum but I'll try here first.

I own a hill climb car.

I run the marketing division of an engineering software solution vendor.

I have budgeted for some "advertising" mid year and would like to put our company name and logo on the side of our hill climb car. This does actually make some commercial sense for our company and could help contribute to the running costs for this season. Anyway I was wondering if there are any tax "efficiencies" associated with advertising and if anyone has done this before?
Also I don't want the running costs of the hill climb car to go through our accounts and therefore the bits we buy become assets of the company. Therefore is it a simple case of "buying" a transfer with the company logo on it for £1000 say?

Any help would be greatly appreciated.

[Eric Mc]

Companies are perfectly within their rights to sponsor or support the sporting efforts of an individual. If the company can prove that the costs incurred are wholly and exclusively for the purpose of their trade (i.e. bona fide advertising), then they can legitimately claim those costs as tax deductable expenses in the accounts.

If the company buys assets which are not for the company's trading activity, it is doubtful if Capital Allowances would be claimable on those assets.

Another thing to consider is "who is being sponsored" or "supported". If the individual or team is an outside agency - such as a football team, or a local athlete (or even a local racing driver) there would be no real issue. However, if the individual being sponsored is connected in any way to the spnsoring company (i.e an employee or a director or a relative of an employee or a director), then it is almost definite that there will be a PAYE Benefit in Kind arising on the amount of money being expended on the individual by the company.

Edited by Eric Mc on Tuesday 20th March 13:39

[steviebee]

A client of ours' lad is moving up from karts to FRenault. I think the way he has done this is to have set up a company (racing team) and invoice his company for the marketing services (spronsorship) that it provides.

[Graham]

steviebee said:

A client of ours' lad is moving up from karts to FRenault. I think the way he has done this is to have set up a company (racing team) and invoice his company for the marketing services (spronsorship) that it provides.

You can get into trouble doing that... unless you can prove the company is setup to make a profit, and then im sure if the driver is an owner or employee of the company they you can get done for benifit in kind...

im sure eric will give us the black and white..

[Eric Mc]

Absolutely.

Companies Act and tax legislation insists that any connections between the two companies are clearly indicated in the accounts. These discloures are there specifically for the benefit of the Revenue so that they can assess if any taxable benefits are accruing to connected individuals.

On the other hand, if both companies disclose everything up front and pay all the relevant taxes and NI, then the Revenue will probably be completely satisfied with the arrangement.