A: In short, yes the client will be able to recover the VAT incurred on this football kit as input tax (assuming they are not on the Flat Rate Scheme) however there will also output tax. This is because HMRC will view this scenario as a barter transaction with a standard rated supply of the kit by your client to the club in return for a standard rated supply of sponsorship (advertising) services to your client by the club. As no money is changing hands, the gross (VAT inclusive) value of the two supplies would be equal. If the football club is VAT registered it should issue your client a VAT invoice for the sponsorship which the client would be able to recover subject to normal input tax rules.
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