The following Value Added Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
IP COMPLETION DAY: 11pm (GMT) on 31 December 2020 marked the end of the Brexit transition / implementation period entered into following the UK’s withdrawal from the EU. At this point in time, key transitional arrangements came to an end and significant changes began to take effect across the UK’s VAT and customs regime. This document contains guidance on subjects potentially impacted by these changes. Before continuing your research, see the Brexit — overview guidance note.
This guidance note provides an overview of the VAT treatment of sponsorship income.
A sponsor normally provides products and / or services free of charge or financially supports an event, activity, person or organisation. A sponsor can be an individual or group that provides the support. Sponsorship is usually described as a cash and / or in-kind fee paid to an organisation, typically in sports, arts, entertainment or charity sectors that is made in return for access to the exploitable commercial potential associated with that event / cause.
A person who receives sponsorship is normally regarded as making a supply to the sponsor and more information on the possible VAT consequences can be found below.
Payments are often described as a donation and sponsorship is similar to a donation in that the person giving the money is motivated by a need to support a cause, etc. However, a donation is freely given with no expectation of receiving anything in return, whereas, with sponsorship, the sponsor is expecting to receive a benefit of some description in return and this may be a supply for VAT purposes and the VAT issues need to be considered.
This section provides an overview of the VAT treatment of the goods / services provided by both the recipient of the services and the person providing the sponsorship.
If the recipient of the sponsorship is obliged to provide the sponsor with a significant benefit, then the sponsorship could be viewed as payment for a supply of services
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