Motor Racing Sponsorship was Tax Deductible
In order for an expense to be 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, rebranded 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.