Is sponsorship tax deductible?

Kevsgreat

I run a five a side team in a league where a lot of teams are sponsored by local businesses. Outside of the 160+ players in this league I can't imagine many people know the names of each team, so I don't know what the attraction for any business could be.

A friend of mine mentioned so many teams are able to talk businesses into sponsoring them because it's tax deductible. Is this true? If someone paid say £500 for kits and our league fees, would that business be able to claim this back or avoid paying the same amount of tax or something?

Any help you could give is appreciated.

fengirl_2

A sole trader could not include these costs in their accounts (unless they could argue that it was advertising), but a limited company could.

kalaika

fengirl wrote: »

A sole trader could not include these costs in their accounts (unless they could argue that it was advertising), but a limited company could.

Although the costs would be disallowed for the company if the managing director of the company is involved in the running/operation of the football league (as this would indicate that the sponsorship had an element of non-business purpose).

From HMRC website:
"Typically (but not exclusively) there may be a non-business purpose where... the business proprietor or controlling director has a personal involvement in the sponsored activity (such involvement often pre-existing the sponsorship)."
http://www.hmrc.gov.uk/manuals/bimmanual/BIM42565.htm