Sponsorship is dual purpose

The taxpayer company was controlled by C. It made substantial sponsorship payments to the local rugby club which C became heavily involved in running in 1999 playing a substantial role in making it successful.

C’s role at the club gave him the opportunity to establish himself in the local business community and afforded him valuable connections.

The taxpayer claimed the sponsorship payments as deductible sums in its accounts under advertising and marketing under TA 1998 s 74(1). HMRC refused the claim on the basis the payments had a dual purpose having been made at least in part to support the club and enable C to pursue his interest in it.

The First-tier Tribunal agreed with the Revenue and the taxpayer appealed.

The Upper Tribunal said the question was solely about whether or not the taxpayer’s purpose had been exclusively a business one.

The First-tier...