Sponsorship of grand prix

The taxpayer company provided logistical solutions for airline companies and arranged worldwide transport of spare parts for their aircraft. It appealed against an assessment.

The first issue related to a deduction of £64 795 claimed against a bad debt in the firm’s accounts for February 2004. HMRC said the amount was not allowable because it arose in respect of a transaction carried out in the taxpayer’s 2001/02 accounting year and should have been claimed in the same period. The tribunal agreed.

The second issue concerned an amount paid to the business in settlement of litigation. The director said the sum was paid into an account held by another of his companies at his request and nothing was paid directly to the appellant.

The tribunal said it was “well established that if a creditor requests a debtor to pay the debt to a third party such a payment is...