I asked this question before on a forum & got a lot of confusing replies with a lot of grey areas exposed. One thing was aparent though, if a sponsor pays you money (be it a local shop or a large distributor) strictly speaking you should declare this as income to the taxman.. it's then up to them to decide if you pay any tax or not & that will depend on if you have made a profit or if all your income has gone back into covering your overheads & that will usually depend also on your primary income & how much of that goes into the hobby.
If you are sponsored in parts & spares, technically speaking you won't have to pay tax but should you sell those parts on then you could argue this has become an income & is a very sticky wicket.
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