Company Xmas Party

[THEPUMA]

I am assuming that you could just claim for part of the expenses associated with a company "event" ?

e.g. say you book an overnight stay in London comprising (separately paid for) train and taxi travel, hotel, theatre, meals, drinks. If it took you over £150 per head then is there anything to stop you claiming for just the hotel, meals and drinks and omitting the rest?

This obviously wouldn't work if you booked a complete "package" but otherwise how would Hector know any different?

The way to do it is for the employee to reimburse the excess over £150 to the company, which then reduces the cost to the company to £150 and there is therefore no taxable benefit.

[Kess]

If I understand the rules right then me and a guest could have any number of company "events" throughout the year and claim for them so long as the total for the two of us doesn't exceed £150 x 2.

To keep within the rules do you think qualifying events are meant to be something distinctive and out of the ordinary, or could we just be boring and go out for a quiet meal costing up to £75 every 3 months?

[Bluebird]

http://www.hmrc.gov.uk/manuals/eimanual/EIM21690.htm

HMRC just refer to "two or more events" - however the ephasis is on "annual" - I'd try and keep it down to no more than 2 to avoid causing suspicion...

[FiveTimes]

http://www.hmrc.gov.uk/manuals/eimanual/EIM21690.htm

HMRC just refer to "two or more events" - however the ephasis is on "annual" - I'd try and keep it down to no more than 2 to avoid causing suspicion...

and my accountant advised me that I am only allowed 1 event per year, and only £150.
I might need to look at changing soon

[lombardox]

This is a little puzzling. How do you prove how many guests have attended your event? Have them sign the invite in blood?

[gadgetman]

Just had the latest list of expenses through from SJD which states, under "Expenses You Can Put Through The Company":

"'- £150 (inc. VAT) receipted staff annual meal, per employee who has a salary through the company."

Nothing about guests, despite the wording on the HMRC site to the contrary.

Why are they still getting this wrong? Care to comment Simon?

[Bluebird]

This is a little puzzling. How do you prove how many guests have attended your event? Have them sign the invite in blood?

You should have some sort of number in mind - I guess HMRC will [ if they get that petty ] look at the reciepts you've kept regarding the event.

ie if your reciept says " 2 x Prawn Cocktail, 2 x Rump Steak & 2 x Coffee " I guess you'd be hard puhed to explain why you're putting it down as 1 employee and 9 guests....

[THEPUMA]

I've mentioned this before, and got some stick, but I still think it is worth reiterating.

You wouldn't be able to have a Christmas party for you, your family, all your mates and your hairdresser on the basis that for any expense to be deductible for corporation tax purposes it has to be incurred wholly and exclusively for the purposes of the trade.

This is a fundamental underlying principle of corporation tax.

So unless the Christmas party is going to enhance the business in some way, the expense is not tax deductible. Playing devil's advocate, if I were a CT Inspector, if I could be bothered I would disallow all Christmas party related expenditure unless the client or business contacts attended.

If it is just director and company secretary, who happen to be married, there is no business enhancement whatsoever as a result of the party.

[~Craig~]

I've mentioned this before, and got some stick, but I still think it is worth reiterating.

You wouldn't be able to have a Christmas party for you, your family, all your mates and your hairdresser on the basis that for any expense to be deductible for corporation tax purposes it has to be incurred wholly and exclusively for the purposes of the trade.

This is a fundamental underlying principle of corporation tax.

So unless the Christmas party is going to enhance the business in some way, the expense is not tax deductible. Playing devil's advocate, if I were a CT Inspector, if I could be bothered I would disallow all Christmas party related expenditure unless the client or business contacts attended.

If it is just director and company secretary, who happen to be married, there is no business enhancement whatsoever as a result of the party.

Thats a fair point but how many large companies who hold christmas events invite their clients. I thought the point was to reward the employees in small way rather than to enhance the business.

[TheFaQQer]

Here's the HMRC link again.