Client Christmas Party

[Batcher]

You don't have to talk about business But it does need to be an "annual event" and open to all staff, i.e. not a series of Saturday nights on the town.

I checked with my accountant before I went just to be sure. The trip wasn't wholly about the business so I couldn't claim the hotel/travel costs but if we had a board meeting over a meal then that would be allowable. I know from my IR35 investigation that HMRC will ask awkward questions...

We are the only 2 members of staff so that's it's not a problem if we have a series of Saturday nights out to discuss business As long as we claim our £300 over the year I don't mind how we get to the total.

[TheCyclingProgrammer]

It DOESN'T have to be an annual event. But it does have to be open to all staff.

Like Jamesbrown, I was also under the impression that it had to be an annual event, although you could have more than one, e.g. summer BBQ and Xmas party.

All HMRC manuals that I can find specifically say annual event. In other words, occasional outings to the pub or meals don't really count.

I have no idea what legislation covers this though and I wouldn't be fully reliant on HMRCs manuals and it wouldn't be unusual for HMRC to have their own interpretation of the legislation that doesn't quite match reality.

[Alan @ BroomeAffinity]

I have no idea what legislation covers this though and I wouldn't be fully reliant on HMRCs manuals and it wouldn't be unusual for HMRC to have their own interpretation of the legislation that doesn't quite match reality.

EIM21690. It is a bit of a language issue. You can have more than one annual event I guess. So, maybe a spring, summer, autumn, winter. But yes, a series of adhoc Friday nights on the lash might not cut it.

[jamesbrown]

It DOESN'T have to be an annual event. But it does have to be open to all staff.

Please quote the relevant legislation. It's perfectly clear from all HMRC documentation that it does indeed need to be an annual event, although I also agree with TCP about HMRC having their own interpretation of legislation. At the very least, a flagrant contradiction of HRMC guidance will risk having a claim disputed following investigation (however remote that possibility might be).

[jamesbrown]

EIM21690. It is a bit of a language issue. You can have more than one annual event I guess. So, maybe a spring, summer, autumn, winter. But yes, a series of adhoc Friday nights on the lash might not cut it.

Based on that, I stand by what I wrote. It needs to be an annual function. However, there's obviously some ambiguity as to what constitutes an "annual function", which is precisely why I gave the example of a series of Saturday nights down the pub.

[Alan @ BroomeAffinity]

Section 264 ITEPA 2003
Directors and employees, except those in an excluded employment (see EIM20007), are chargeable on their share of the expense incurred by an employer in providing a social function for employees, except where Section 264 ITEPA 2003 exempts the charge to tax.

The exemption applies to an annual party (for example, a Christmas party), or similar annual function (for example, a summer barbecue), provided for employees and:

available to employees generally or
available to employees generally at one location, where the employer has more than one location.
Where an employer organises its workforce at one site into separate sections or departments, an annual party may be provided separately for the different sections (e.g. separate wards in an NHS hospital trust). As long as a party is available generally to all staff at the site, and the other conditions are satisfied, the exemption may apply.

If the employer provides one annual function for employees no charge to tax arises if the cost of the event per head does not exceed £150 (until 5 April 2003 the figure was £75 per head).

Two or more functions
If the employer provides two or more annual parties or functions, no charge arises in respect of the party, or parties, for which cost(s) per head do not exceed £150 in aggregate. Where there is more than one annual function potentially within the exemption, we do not expect employers to keep a cumulative record, employee by employee, of functions attended. But for each function the cost per head should be calculated. The cost per head of subsequent functions should be added. If the total cost per head goes over £150 then whichever functions best utilise the £150 are exempt, the others taxable (see examples at EIM21691).

[TheCyclingProgrammer]

The above manual document is the one I was referring to that only seems to refer to annual function.

I suppose the crux of the issue here is that there is some ambiguity in the language and its open to interpretation.

In the event of an investigation or even a simple records check, I'd hope that HMIT would use a degree of common sense when looking at claims for annual events so long as the other requiremnets have been met.

Because after all, at worst, assuming director and spouse company secretary both attend and you use the entire £150 exemption we are only talking about £60 of tax.

[Alan @ BroomeAffinity]

Because after all, at worst, assuming director and spouse company secretary both attend and you use the entire £150 exemption we are only talking about £60 of tax.

Indeed

[jamesbrown]

use a degree of common sense

Yes, and that common sense applies both ways. Thus, if you're "topping up" to £150 on arbitrary events, they'll probably scrutinize where else you might be taking the mickey.

[TheCyclingProgrammer]

Yes, and that common sense applies both ways. Thus, if you're "topping up" to £150 on arbitrary events, they'll probably scrutinize where else you might be taking the mickey.

Fair point. Routinely spending exactly £150 per person each year would certainly raise some eyebrows I think.