One of my clients has just emailed me to say they want to sponsor a member of a historical interpretation group. The deal would involve an aspect of advertising in that the business would get a byline on the handbills, can the full amount be posted to advertising or should I look to split it somehow, and if so how?
On the same vein, this client also wishes to invest in a West End production. they would be listed as a sponsor, given space in the programme for some advertising and there is a charity element as part of the profits are going to a named charity. It's quite a lot of money, and I'm not sure if it is reasonable to put it all through as an expense. what are your views/thoughts?
Apparently this sort of, I suppose Angel investment, is a known method for building an investment portfolio - somewhat out of my league! They are also talking of investing in the production company which is based in Canada.
What are the tax implications of such investments and how would I record the sums involved? Should I recommend that this should be a personal investment rather than a business one?
any help, thoughts, ideas....
-- Edited by Unwize Owl on Tuesday 13th of January 2015 09:14:12 PM
These are just my thoughts, and hopefully someone more knowledgeable will give their view.
The historical interpretation sponsorship I would be inclined to put to advertising.
The theatre investment is known as crowdfunding and is becoming increasingly popular. By the sounds of it, there's no ROI (return on investment) other than promoting their business. That some of the profits are going to charity is a side issue, and I doubt tax deductible to the client. I'm inclined to think advertising again, but given that it's a considerable sum, and the money is being given as an investment rather than as a charge for advertising/promotion, it may be that this isn't a legitimate business expense. As you say, it maybe this should be a personal investment rather than a business one.
A direct investment in the production company seems more straightforward, and providing there is a potential ROI, could be done through the business, with any profits being taxable.
I re-iterate that these are just my thoughts, and should not be treated as advice.
-- Edited by 111 Bookkeeping and Payroll on Tuesday 13th of January 2015 10:57:51 PM
Is the production in Canada? Are customers in Canada?
I am just wondering whether there would be any implications of showing it as advertising, if say the business sales are solely to UK citizens, where no advertising would be seen.
Just a thought.
As for the investment side, its not something I have dealt with before, but you could do some more research using HMRC guides on advertising and sponsorship, allowable donations and perhaps crowdfunding (I had a quick look but its all about receiving it, not paying it). No doubt you would have to consider the specifics of the deal while reviewing the legislation.
Failing that, ring HMRC? They may be able to put you onto a scheme (perhaps along the lines of social investment tax relief).. Although maybe the location of the production will cause an issue.
-- Edited by FoxAccountancyServices on Wednesday 14th of January 2015 08:57:45 AM
The production is A single evening with a bunch of celebs I'm told. If it is a success it will go for a West End run and provincial tour later in the year. All UK based.
The Canadian investment is separate, and I think should be personal rather than business as the benefit to the business is somewhat dubious!
Thanks for the comments, if there is anything else I should think of.... Meeting the client tomorrow.
