A testimonial or benefit year is often brought about by friends and supporters of a sports player (although not exclusively so). The purpose is to raise funds for the player and often for a small number of UK registered charities; funds are usually raised by way of a series of events and possibly a special exhibition match.

A group of friends and supporters joining together to undertake this role will be considered as an “unincorporated association” by HMRC and will be liable to corporation tax on any profits or gains they may make. There is a major misconception that because an event is organised for a testimonial it is tax free – it is not necessarily so.

HMRC are undertaking a major project to look at the affairs of many committees to check the tax position and where HMRC believe tax (or VAT) should have been paid they are pursuing the committee and individual committee members for any amounts they believe are outstanding.

There are so many traps for the inadequately advised in this area and despite the best intentions of the committee they may, inadvertently, step over the fine line between acting as a conduit for gifts and donations to trading and so become taxable on the funds raised. There are also a number of basic statutory requirements that need to be addressed.

We have an exceptional level of expertise in this most difficult area of tax and can advise you throughout your activities so that you are in the best possible position to make a correct tax return and then defend your position.

We can review and assess the activities of a committee on a real time basis to help determine the correct tax treatment of the funds being raised. We can also advise you on the VAT treatment. We can advise you on completing your tax returns (and VAT returns) and, where necessary, discuss such matters with HMRC with a view to making sure HMRC understand where the figures have come from; reducing the possibility of investigation or penalties for mistakes.

If you are already under investigation we can help manage that process or make appropriate disclosures on your behalf; reducing the need for you to be interviewed by HMRC officers as much as possible and controlling the flow of information and documents. We will often agree a way forward with HMRC on your behalf so that everyone involved is working towards a resolution by way of a clearly agreed agenda.

We remain completely objective throughout the entire process; as will our advice and wherever applicable our specialists will robustly defend your position. You will be informed and consulted at every stage. Any disclosures and any settlement proposals will be discussed and agreed with you before submission.