Clubs can assume that in most cases their sponsors will need to pay VAT on top of their sponsorship amount.
There are only 2 exceptions to this rule:
1. The party that is sponsoring is not located in the UK and is therefore considered an international entity.
- In practical terms if a sponsor has more than one location, you should consider which location is contracting or giving instruction for the services in return for the sponsorship – who is legally obliged to provide the funding and who will benefit from the services. In most instances where there is a UK location, unless there is evidence to the contrary, the UK location will be the sponsor and VAT would apply
OR
2. The party that is sponsoring is gifting the amount to the club and is not expecting any service (advertising, recognition, referral, etc.) in return.
If you are not sure about this, please reach out to the SA sponsorship team for further clarification.