You need permission from the CAA to throw anything out of the aircraft (balloons, loo rolls, bags of flour) and this permission, althought relatively straightforward, costs a few 100 UKP plus a time investment to handle the paperwork. At least, that's what somebody mentioned on here a while ago. That's a considerable amount, even if you spread it across a number of participants.
My club has an annual spot landing "competition" - although you need to be careful using the word "competition" in this context, for insurance reasons. Last time I participated I had a birdstrike which led to serious damage to the wing and the aircraft being out of action for about three weeks while they repaired the leading edge. We were very carefully referring to the event as a "spot landing challenge" instead of a "competition" in that case.