Client Christmas Party

[pacontracting]

My client is having a Christmas Party for it's employees. It has also invited contractors - but we have to pay (it's free for employees).

To attend means travel up to London (where the event will be held), potential stay overnight etc. Am I right in thinking this can be expensed as 'client entertainment' - so not deductible for corporation tax - but an allowable business expense?

Thanks.

[PerfectStorm]

What is an allowable business expense if not deductable from corporation tax?

[TheFaQQer]

What is an allowable business expense if not deductable from corporation tax?

One that is not deductable for corporate tax purposes but doesn't incur a benfit in kind. For example, PCG membership.

[Martin at NixonWilliams]

My client is having a Christmas Party for it's employees. It has also invited contractors - but we have to pay (it's free for employees).

To attend means travel up to London (where the event will be held), potential stay overnight etc. Am I right in thinking this can be expensed as 'client entertainment' - so not deductible for corporation tax - but an allowable business expense?

Thanks.

It's a difficult one, but I think there is an argument for claiming if you feel the costs could generate additional income for the company. For example, if you feel this could help generate new contracts etc.

There is however the risk that being invited to the staff Christmas party is an indicator of IR35.

I hope this helps.

Martin

[eek]

It's a difficult one, but I think there is an argument for claiming if you feel the costs could generate additional income for the company. For example, if you feel this could help generate new contracts etc.

There is however the risk that being invited to the staff Christmas party is an indicator of IR35.

I hope this helps.

Martin

surely that is solved by the different treatment of contractors and employees.

[SueEllen]

There is however the risk that being invited to the staff Christmas party is an indicator of IR35.

Why?

Lots of clients invite workers on their site to their parties as it generates good will.

I had a client who didn't, and as a result lots of their permanent staff refused to go to the Christmas party. The contractors didn't care. However the permanent staff were angry that the contractors they worked with, which could be 60% of the people in their teams, weren't invited.

Plus it doesn't mean clients don't have other ways to distinguish between permanent employees and contractors.

[Martin at NixonWilliams]

surely that is solved by the different treatment of contractors and employees.

Not in my opinion. It is the fact they are invited to a staff event that indicates that they are being treated in a similar way to employees. We would not invite our window cleaner, IT providers etc. to our Christmas party.

[jamesbrown]

There is however the risk that being invited to the staff Christmas party is an indicator of IR35.

Even if it were an indicator, it wouldn't be an important one. However, in this case, there's an explicit separation between employees and contractors. I think people can get carried away with the minor details of IR35. It's the big picture that matters (RoS, MoO, D&C) and building a relationship with the client is an important part of being in business (i.e. one can do this without it being in an employer-employee relationship). It's pretty routine to invite reps from large suppliers to a Christmas party, so I see no problem in inviting small ones too. Personally, I'd steer well clear of Christmas parties because they totally suck, but that's a separate issue

[RasputinDude]

Not in my opinion. It is the fact they are invited to a staff event that indicates that they are being treated in a similar way to employees. We would not invite our window cleaner, IT providers etc. to our Christmas party.

I can think of a number of large organisations that do invite some suppliers and clients to their Christmas parties. I have been invited (when being a salaried permie) to several as a representative of my employer. Sometimes, my employer has had to pay, other times not.

[Martin at NixonWilliams]

I agree it is trivial, but a point worth mentioning. I am sure there are many organisations that invite suppliers etc., I have seen this myself, but attending what is usually a staff only event could be seen as an indicator of IR35 irrespective of the likelihood of it affecting their status.