Business contributions to leaving/retirement gifts

[Brown and Boris]

Not to employees but I would be interested in that too, but for clients;

I have a couple of very good contracts with central govt where the head of department, who has overseen the contract or chaired the contract steering panel has left retired. Invariably we get an email asking if we want to contribute to the retirement gift and we often do.

Is that an allowable business expense?

I would argue that it is, as had it not been for the business connection, and the connection is purely a professional one, we would not be being asked to contribute. We also want to remain on good terms with the new boss as invariably a contribution leads to an invitation to attend the leaving party where we get to meet the new head honcho. In two recent cases the contract has actually ended but again we want to keep contact with the job incumbant, but is that still 'wholly and exclusively'?

[Eric Mc]

I am pretty sure that it would be allowable as a "Wholly and Exclusive" espense. However, if the gift fell into any sort of "Entertainment" definition then it would end up being disallowable even if it was 100% genuinely for business - as all "Entertainment" is disallowable.

The employer of the retiree might find that he should be declaring the "gift" from your business as a Benefit in Kind" on the employee's P11d as well.

[Brown and Boris]

Eric Mc said:

I am pretty sure that it would be allowable as a "Wholly and Exclusive" espense. However, if the gift fell into any sort of "Entertainment" definition then it would end up being disallowable even if it was 100% genuinely for business - as all "Entertainment" is disallowable.

The employer of the retiree might find that he should be declaring the "gift" from your business as a Benefit in Kind" on the employee's P11d as well.

I suspect it will be a nice pen or table lamp by the time he sees it and added to the pot of many others.. OMG, what if we all had to declare our leaving presents to the tax man!

[Eric Mc]

Technically, you do - and what's more, the business should unclaim any Input VAT they were tempted to reclaim on these items.

[2 sMoKiN bArReLs]

Brown and Boris said:

Eric Mc said:

I am pretty sure that it would be allowable as a "Wholly and Exclusive" espense. However, if the gift fell into any sort of "Entertainment" definition then it would end up being disallowable even if it was 100% genuinely for business - as all "Entertainment" is disallowable.

The employer of the retiree might find that he should be declaring the "gift" from your business as a Benefit in Kind" on the employee's P11d as well.

I suspect it will be a nice pen or table lamp by the time he sees it and added to the pot of many others.. OMG, what if we all had to declare our leaving presents to the tax man!

Seems strange to ask a question, then moan about the answer! Eric, being a pro, has given you the technically correct answer. In business we all know that some expenditure simply gets "lost".