Gifts from Clients

[Jasandjules]

Ok,

I did a rather good job for a client and have been acting for free. She has now just sent me a fairly large sum of money as a thank you gift.

Does anyone know if I must run this through the company - the cheque is made out to me so I am not sure I can even do that. And what are my tax implications (if any).

[anothernameitist]

Depends on your company policy on "gifts".

if you have been acting for free is this allowed in your company policy.

How fit is she too, payment in kind eh?

[C0ffin D0dger]

The firm I work for (American) we have to watch training videos about this sort of thing annually, comes under the banner of Ethics, Compliance, Anti Competitiveness, Anti Trust, etc. etc. Basically accepting any sort of gifts other than something like a pen or a coffee mug from a client is a big no no, even being taken out to lunch is borderline. There have been many big court cases around stuff like this with individuals as well as companies being slapped with big fines and even prison sentences.

Not saying this will happen to you like but I'd make your clients generous gift well known to your employer. They will advise how to proceed.

[Jasandjules]

I am self employed.

[Countdown]

Jasandjules said:

Ok,

I did a rather good job for a client and have been acting for free. She has now just sent me a fairly large sum of money as a thank you gift.

Does anyone know if I must run this through the company - the cheque is made out to me so I am not sure I can even do that. And what are my tax implications (if any).

It's taxable. Like tips.

[tr7v8]

C0ffin D0dger said:

The firm I work for (American) we have to watch training videos about this sort of thing annually, comes under the banner of Ethics, Compliance, Anti Competitiveness, Anti Trust, etc. etc. Basically accepting any sort of gifts other than something like a pen or a coffee mug from a client is a big no no, even being taken out to lunch is borderline. There have been many big court cases around stuff like this with individuals as well as companies being slapped with big fines and even prison sentences.

Not saying this will happen to you like but I'd make your clients generous gift well known to your employer. They will advise how to proceed.

Us too, we're allowed to lunch clients but within reason & $50 on gifts both ways etc.

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tr7v8 said:

Us too, we're allowed to lunch clients but within reason & $50 on gifts both ways etc.

Just to clarify there is a difference between "gifts" and cash. OP's example is cash.

[Countdown]

anonymous said:

[redacted]

Doesn't make a difference.

[Eric Mc]

You could have refused to accept the gift.

And I really mean that. If the contract was for you to do the work with no consideration, you should not have accepted any money or gifts in kind.

Now that you have, it should be declared as income in the normal way and, if you are registered for VAT, you should declare the VAT on the proceeds received.

You also need to be aware of the reporting requirements under The Bribery Act and possibly the Proceeds of Crime Act as well.

Is your business run as a sole trader or through a limited company?

[Countdown]

Eric Mc said:

Now that you have, it should be declared as income in the normal way and, if you are registered for VAT, you should declare the VAT on the proceeds received.

Are donations vat'able?

[anothernameitist]

You are self employed, then who is the company you need to tell? Were you subcontracting.

Think you need to upfront if you were a subbie.

And speak to your accountant about declaration to HMRC

[Eric Mc]

Countdown said:

Eric Mc said:

Now that you have, it should be declared as income in the normal way and, if you are registered for VAT, you should declare the VAT on the proceeds received.

Are donations vat'able?

If they are perceived as being a payment for the supply of goods or services.

[warp9]

I'm pretty sure the tax man will be interested in it as they will see it as income. You would need to speak to an accountant or tax professional to see if there are any allowances around it.

I think this whole area of 'gifts and hospitality' is increasingly going to be looked at, particularly following the FIFA debacle. Our business is governed by the FCA and we have to keep a register of anything someone receives over £50.

[Countdown]

Eric Mc said:

Countdown said:

Eric Mc said:

Now that you have, it should be declared as income in the normal way and, if you are registered for VAT, you should declare the VAT on the proceeds received.

Are donations vat'able?

If they are perceived as being a payment for the supply of goods or services.

I think (although I stand to be corrected) voluntary additional payments are not vat'able.

http://www.hmrc.gov.uk/manuals/vatscmanual/vatsc56...

[Eric Mc]

If that is all they are.

HMRC has the right and the power to challenge such payments.

The important word is "consideration".

[Dr Interceptor]

A lot of the above are 'by the book' comments.

Of course you could just pay the cheque into your personal account and tell the tax man you sold a piece of the family silver.

[anonymous-user]

Are you a barrister, JandJ, or a member of another branch of the legal profession? The regulators usually have something to say on the subject of gifts from clients. It is also worth a look at the Bribery Act 2010. The scope of anti-corruption laws is rather wide. I am not for one nano second suggesting that anything dodgy has occurred, and am a billion per cent certain that nothing dodgy has occurred, but you have to be Caesar's wife in these matters.

[Eric Mc]

Dr Interceptor said:

A lot of the above are 'by the book' comments.

Of course you could just pay the cheque into your personal account and tell the tax man you sold a piece of the family silver.

Aaah - you can't beat the old tax fraud route. Wins every time.

[Dr Interceptor]

Eric Mc said:

Aaah - you can't beat the old tax fraud route. Wins every time.

Well nobody else had suggested it

Of course OP, don't do this under any circumstances. You'll be in for VBRJ from the HMRC.

[Jasandjules]

anonymous said:

[redacted]

It is a personal cheque.

The case has been settled as well.

I think I will ask my company accountant! And regulator.