Sales, advertising and marketing

By Tolley

The following Corporation Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Sales, advertising and marketing
  • Launch costs
  • Signs
  • Sponsorship
  • Business entertainment and gifts

Expenditure on sales, advertising and marketing activities may include amounts which are disallowable in the company’s computation of taxable total profits. This may be because the expenditure is capital in nature, or more likely because it is not incurred wholly and exclusively for the purpose of the company’s trade, or is specifically disallowable as business entertainment under CTA 2009, s 1298. For further guidance on general principles of trading profit adjustments, see the Trading income ― general principles guidance note.

Expense accounts called sales, advertising, marketing, PR, etc should always be checked for disallowable items and, depending on the amounts involved, it may be appropriate to include a breakdown of expenditure with clear descriptions on the tax computation. This is advisable in particular if amounts fluctuate significantly from prior years or if there is some other unusual event in the year which may prompt HMRC to open a compliance check.

This guidance deals with the tax treatment of certain types of sales, marketing, advertising, etc expenditure where there is HMRC guidance and / or relevant case law.

Launch costs

Companies may incur costs in respect of the initial launch or establishment of a new product or brand. The costs may be from a mixture of sources, ie the acquisition of a title in publishing, plus additional costs to develop and re-launch the brand. Alternatively, a brand new product may be built up in-house entirely from scratch. These costs are often reflected in the value of a marketable intangible asset and as such fall within the intangibles assets regime, see the Overview of corporate intangibles tax regime guidance note.

BIM42551, BIM35501

Expenditure on advertising screens and

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