Sponsorship is a commercial arrangement — the sponsor provides money or value in exchange for promotional benefits. Unlike advertising, sponsorship involves an association with the event or property. VAT may be recoverable on sponsorship payments if there is a genuine business benefit.

• VAT: sponsorship is usually a supply of advertising services — sponsor can reclaim input VAT
• Tax: sponsorship payments are deductible if wholly and exclusively for trade purposes
• Naming rights: clearly define what the sponsor can call the event
• Category exclusivity: preventing competing sponsors is a key value proposition
• Force majeure: event cancellation provisions are essential after COVID-19

Legal reference: HMRC Business Income Manual; ASA CAP Code (if advertising involved); VAT Act 1994