Discussion
Does anybody know the HMRC rules on 'entertaining?'
I have a couple of guys I sub-contract work out to who have recently done me a number of favours in getting work done in short time scales meaning that we were able to hit our deadlines. They cancelled their weekend plans to help us out. In the past I have bought a gift out of my own pocket as they de-stressed my life by helping out.
I want to express my gratitude and was thinking about taking them out for a meal, where perhaps we can 'discuss how to make sure we aren't in that position again' and more generaly dicuss how we work together.
How will the HMRC see that? BiK or business meeting? Which costs can I set against business expenses if any?
Will it change if they bring their partners who also had their plans cancelled so they could do work for me?
No - bona fide, authentic and genuine BUSINESS entertainment is STILL not allowed for tax purposes.
The normal rule for determining if an expense can be claimed against business profits is whether the expense was incurred "wholly and exclusively for the purpose of the trade". Unfortunately, "Business Entertaining" is excluded from this criteria and is ALWAYS disallowed, even if it 'WAS incurred wholly and exclusively for the purpose of the trade".
The only form of "Entertaining" that can be allowed is "Staff Entertaining" - and even then there are restrictions.
With "Entertaining" type expenses, it is sometimes possible to legitimately redefine some of these costs as "Advertising" and/or "Promotion". If that is the case, then it would be advisable to use those types of expense categories wherever possible. On occasion, there will be no choice but to analyse the expense as "Entertainmant" and face the fact that you will not be able to reclaim it as a business cost for tax purposes.
Please note that, from an accounting point of view, "Entertaining"! is a perfectly legitimate expense heading and should be used when and where it is appropriate. It is just the tax man who specifically does not want you to claim it. It is therefore always treated as an adjustment when computing the taxable profit of the business.
The normal rule for determining if an expense can be claimed against business profits is whether the expense was incurred "wholly and exclusively for the purpose of the trade". Unfortunately, "Business Entertaining" is excluded from this criteria and is ALWAYS disallowed, even if it 'WAS incurred wholly and exclusively for the purpose of the trade".
The only form of "Entertaining" that can be allowed is "Staff Entertaining" - and even then there are restrictions.
With "Entertaining" type expenses, it is sometimes possible to legitimately redefine some of these costs as "Advertising" and/or "Promotion". If that is the case, then it would be advisable to use those types of expense categories wherever possible. On occasion, there will be no choice but to analyse the expense as "Entertainmant" and face the fact that you will not be able to reclaim it as a business cost for tax purposes.
Please note that, from an accounting point of view, "Entertaining"! is a perfectly legitimate expense heading and should be used when and where it is appropriate. It is just the tax man who specifically does not want you to claim it. It is therefore always treated as an adjustment when computing the taxable profit of the business.
Edited by Eric Mc on Monday 18th June 08:08
Eric Mc said:
...the "free tickets" would need to be declared as a "Benefit in Kind" on a P11d for the relevant employees/directors.
As I understand it, if you take someone for a meal that you charge to your company, then the recipient is supposed to declare it as a BIK.However, I wonder, does *anyone* actually declare these things?
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