VAT Reclaim Blocked by HMRC Due to Sponsorship Classification as Business Entertainment

[seizinag]

Hello Everyone,

Our UK-based company, operating within the finance sector, recently entered into an advertising sponsorship agreement with a Premier League team. This sponsorship ensures our firm's name appears prominently in stadiums and other official locations, strictly as part of our advertising efforts. We are incurring significant costs for this, and all associated invoices include VAT.

However, HMRC has blocked our VAT reclaim, classifying the sponsorship as "business entertainment," despite us providing the agreements clearly outlining this as a sponsorship and not an entertainment expense.

Given this misclassification, we seek advice on how best to address HMRC’s stance using applicable UK laws. Our expenditure is solely for sponsorship purposes, and we are not engaging in any form of entertainment.

Could anyone advise on the most effective way to demonstrate this distinction to HMRC or reference specific HMRC guidelines that support our case? Any insights would be highly appreciated.

 

[DWS]

First place to ask would be your Companies Accountants as presumably they submitted the expenses on the VAT return so must have been happy with the classification.
Depending on the discussion with them, they can then appeal the HMRC
decision.
I take it the expenses are contributing to an onward taxable supply?

 

[WaveJumper]

Use to sponsor Charlton Football Club (way back) you need to convince HMRC its purely advertising / Marketing they may well be assuming part of the deal is the nice VIP corporate box and other goodies. As above get your accountant to appeal decision

 

[UK Contractor Accountant]

BIM42555 - Specific deductions: advertising expenses: sponsorship​

 

[BtoBnice]

Hello Everyone,

Our UK-based company, operating within the finance sector, recently entered into an advertising sponsorship agreement with a Premier League team. This sponsorship ensures our firm's name appears prominently in stadiums and other official locations, strictly as part of our advertising efforts. We are incurring significant costs for this, and all associated invoices include VAT.

However, HMRC has blocked our VAT reclaim, classifying the sponsorship as "business entertainment," despite us providing the agreements clearly outlining this as a sponsorship and not an entertainment expense.

Given this misclassification, we seek advice on how best to address HMRC’s stance using applicable UK laws. Our expenditure is solely for sponsorship purposes, and we are not engaging in any form of entertainment.

Could anyone advise on the most effective way to demonstrate this distinction to HMRC or reference specific HMRC guidelines that support our case? Any insights would be highly appreciated.

Hello,

It should be still possible to submit the appeal.

For securing the issue, it’s important to analyse the category of transactions which were subject to VAT and the returns filed by your accountant.

The definition of Business Entertainment can be found in:

• HMRC VAT Notice 700/65
• HMRC VIT43200
• Section 84(4)(c) of the Value Added Tax Act 1994
• The Value Added Tax (Input Tax) Order Statutory Instrument 1992/3222 - (article 5)

You should appeal the decision demonstrating that the concerned transactions don’t fall within this definition of the Business Entertainment.