Anybody know much about sponsoring ones own racing "team", re. tax?

Basically, we run Retropower, and, at some point in the future when we are actually making a living, we'd like to go back to racing.

Now I know I can offset basically all the costs against tax, BUT.......

Can one pay the "team" sponsorship over and above that actually required to spend on the season, or would one then simply have to run the team as a business, and pay income tax on the sponsorship income "profit".............

All thoughts gratefully received!!

cheers

Nat

If the team receipts matched the sponsorship income, there wouldn't be any taxable profit to pay tax on....
It's called 'Creative Accounting'.

Are the same rules applicable on allowable "business expenditure" items for offset against sponsorship as against normal business costs?

I guess so?

That said, I guess one could certainly find a good "entertainment" and "advertising" pot to chuck a lot of receipts into!

Nat be careful here and take advice from an accountant who covers this area. One thing i've learnt is don't annoy the tax man. They have really draconian punishments they can dish out.

A friend used to do corporate tax law (think multi million pound deals), she's got out of the game now & i'm not sure she'd be willing to comment but i'll ask her for her views when i next see her.

Have a look HERE

by crikey that all sounds a bit complex!!

I wonder in the same way as the main guy on that thread, why at all levels small family run, non-limited companies sponsor themselves and others to compete in motorsport then??

A lot do it and it must be for tax benefit.

Surely I can claim advertising business expenditure against part of the costs of running a race car, even with me driving? It would be advertising, as are the cars we have out there now sporting our graphics!!

I don't know 100% but I didn't think that you could sponsor yourself. MY understanding was that you would have to sponsor someone else and then they would sponsor you the same amount back.

I would be careful as that looks like very obvious tax advoidence to me, as said I would speak to someone with proper experience.

If your business is motorsport related particularly the construction of competition vehicles then surely the motorsport activities are your shop window.

I guess the sitiuation is different if you make widgets and then run a motorsport activity funded from the business.

If the car etc. is owned by your business then I guess if you pay your business out of your own money for a drive in the car then the tax man can't argue.

Hire your car as an "arrive-and-drive" and claim all purchase/upkeep of the vehicle but pay "benefit-in-kind" for each time you use the vehicle?

Don't forget to declare your prize money as a professional race driver

[Edited on 27/1/10 by minitici]

Cheers NIck and Minitici, both good thoughts.......

yep, the "shop window" is quite right Nick, our main business is building complete vehicles, for road and competition, and actively promote doing pretty much everything "in house" so a complete competition vehicle is a good advert.

You can't sponsor yourself and claim for it. Been there and tried that. Your Accountant will have a stroke!

Nothing to stop you splashing your logo's over and using it as free advertising but don't try and claim the VAT back as thats a no no too.

............Neil

So if I am in the motor trade, and run a motorsport prep business and also carry out restorations, and therefore one of my legitimate business expenses is buying in "stock", and I also do restoration work and motorsport prep in my normal line of work, at what point does it stop being a car that the business happens to own that happens to be a racing car and that is for sale but just hasn't been sold yet.....................

I'm not sure, and I certainly won't want to be trying it on with the taxman, but equally I have a number of cars that we as a business own (either in trade or by one partner's name) and which I could use for racing, but which were a perfectly legitimate business expense...................