asked Her Majesty's Government:Further to the Written Answer by the Lord McIntosh of Haringey on 14 February (
WA 128), what mechanisms are in place to satisfy the Inland Revenue that expenditure on business sponsorship of government activity is revenue expenditure incurred wholly and exclusively for business purposes. [HL1391]
The Inland Revenue examines a proportion of tax returns every year to ensure that individual and corporate taxpayers pay the correct amount of tax. Most of the returns that are examined in detail are selected after a risk assessment, which identifies those cases where errors are most likely, and where the amount at stake is greatest. Tax inspectors are trained to discover evasion, avoidance and technical errors by establishing the full facts and applying the correct interpretation of tax law. As part of this process they will, where appropriate, make enquiries about claims for expenditure on business sponsorship, including sponsorship of government activity.