Firm's sponsorship scheme under fire

AN AMBITIOUS corporate sponsorship scheme for polo matches being promoted by East Anglian firm Mills & Reeve has been questioned by tax analysts Allenbridge.

The £5 million contracted exit EIS Polo Scheme sells licences for polo matches and tournaments at Ascot Park so investors can get a return from sponsorship and media rights as well as substantial tax relief.

But analysts Allenbridge has stamped the scheme as “Not Recommended” in its latest tax shelter report.

Allenbridge says the scheme will not offer a good return and could bring the Inland Revenue down on investors.

The claims are vigorously refuted by the law firm.

The analysts claim corporate events would need to generate more cash for the scheme to work than is possible and doubt enough cash-raising events exist. Allenbridge director of research Martin Churchill said if it transpired there was never any real market for the high-priced events, the Inland Revenue might claim the scheme's main purpose had been to avoid tax. That would mean investors would have to pay back tax relief and interest on it.

Mills & Reeve chief executive Martin Sherwood said the scheme had already met its minimum subscriber threshold.

He described the analysts' report as “extremely misleading to say the least” and said there was no precedent for the Inland Revenue withdrawing tax relief on the grounds suggested by the tax analysts.

He also questioned how Allenbridge could have recommended the same investment 18 months ago, particularly because the structure had been improved.

Under the scheme, Mills & Reeve claim 7 per cent of the subscription in fees, which would amount to £350,000 if the full £5 million comes in.

It would also gain 10 per cent of any net profit.

A similar scheme for the same polo park, which the Norwich-based firm was not involved in, came to grief in 1994 after it was not fully subscribed.