Christmas party expenses

[RichardCranium]

I'm glad this got discussed. Usually it just gets "Oh no, not again" and then no explanation.

I have had a number of accountants over the years and of the three I asked about this they said either "It's not worth the paperwork" or "It doesn't apply to service companies like yours". So I have never taken advantage of it.

I'd like a definitive statement too. Not the legislation but, in English, what is and is not OK.

Can the Missus & I go to the Beefeater?

Can the Missus & I take my mate and his Missus to a nice local restaurant?

Can we go by cab? Can I make the Missus drive and then claim the mileage?

If we take a helicopter to Lanzarotti and spend a weekend in a Casino / restaurant / hotel, how much goes through the books?

Can we stop at home, sorry, the LtdCo Registered Office Address, and do a dinner party and bung the shopping through the books?

Can we book a Corporate Event day and spend the day driving rally cars at Silverstone and put that through as the Xmas Party?

It would be nice, for once, if something could be straightforward.

[TheFaQQer]

IANAA, but here's my approach:

Can the Missus & I go to the Beefeater?

Yes. As many times as you like, as long as you don't go over £150 per head in total throughout the year.

Can the Missus & I take my mate and his Missus to a nice local restaurant?

If you are an employee, and the Mrs is an employee, then yes - you each take a guest. Again, as long as the total doesn't exceed £150 per head, then you are OK.

Can we go by cab?

Yes - it comes out of the £150.

Can I make the Missus drive and then claim the mileage?

No

If we take a helicopter to Lanzarotti and spend a weekend in a Casino / restaurant / hotel, how much goes through the books?

If you can do it all for under £150 a head, then all of it. If not, then none of it. If you go over £150 a head then the whole lot is taxable (not just the bit over £150).

Can we stop at home, sorry, the LtdCo Registered Office Address, and do a dinner party and bung the shopping through the books?

Don't know, but I would think not.

Can we book a Corporate Event day and spend the day driving rally cars at Silverstone and put that through as the Xmas Party?

Yes, as long as it's under £150 a head.

It would be nice, for once, if something could be straightforward.

Wouldn't it just!

You can have as many events as you want, as long as the total for all of them does not exceed £150 a head. For each employee, and they can invite a guest. There is some debate over whether the rules limit you to one guest per employee or not - I have always understood it to be one guest per employee.

[Sally BFCA]

That Technical Inspector will want to see ALL your returns for the last 5 years and my guess is you'll end up being allowed this but assessed for IR35..

Probably would!
Lucky we're accountants then...with more than 1 employee to claim our xmas party!

[RichardCranium]

IANAA, but here's my approach:

Thank you.

£150 PER HEAD! This is going to be a damn good piss-up. I definitely need a contract before my company year end!

Four prawn cocktails, four steak-and-chips, four ice creams, two glasses of sweet sherry and 180 pints of beer it is, then.

[Maslins]

Bollocks.

A tad unnecessary!

The HMRC page you quote relates to whether it's a benefit in kind for the employee, NOT whether it is allowable for the company (EIM is the employment income manual).

To the strict letter of the tax legislation, it is only entertainment for current employees which is allowable.

However it seems HMRC's own manual on staff entertaining says in the third paragraph "In practice the definition of ‘employees’ is extended to include retired members of staff and the partners of existing and past employees." so I'll eat a little bit of humble pie...but only a very small bit as the HMRC manual is technically wrong!

So for whatever reason HMRC will apparently be more relaxed on this than the law.

I would think HMRC would take a very dim view of people bringing all their mates along as has been suggested in this thread. The BIM link posted above makes no mention of non-employees, other than they will apparently consider past employees and partners ok. Wholly and exclusively for the benefit of the trade is still the overarching principle.

As with most things in tax, if you don't take the p!ss, you'll be fine. If you do, and you get an enquiry, HMRC will try their absolute best to find something to stuff you for.


As an aside, the £150 being quoted in no way relates to the deductibility of the costs, that number purely relates to whether a benefit in kind is triggered.

If you spend £10,000 on entertaining 10 members of staff, the whole £10k is allowable against corporation tax, but each staff member should have a BiK of £1,000 declared on their P11D.

Having said that, the general outcome is the same, if you're basically trying to blag a tax efficient night out on the company, then stick below £150/head, as otherwise it won't be very tax efficient.

[Maslins]

Also, re: suggestion 1 guest of employee essentially making it £300 per employee, I think from the EIM:

"The figure of £150 is not an allowance. For functions that are outside the scope of the exemption (see example at EIM21691) directors and employees, except those in an excluded employment, are chargeable on the full cost per head, not just the excess over £150, in respect of:

* themselves and
* any members of their family and household who attend as guests.

The cost of the function includes VAT and the cost of transport and/or overnight accommodation if these are provided to enable employees to attend. Divide the total cost of each function by the total number of people ( including non-employees) who attend in order to arrive at the cost per head."

Suggests to me that (simple example) 2 employees, only one bringing a partner to party costing £300.

Divide £300 by 3 people (including non-employee) = £100 per head.

Employee on their own therefore fine.

Employee bringing partner adds partner proportion to their own = £200 for this employee, therefore this person has a BiK of the whole £200.

[swamp]

Make sure it's an annual event.

One company held a 40th birthday party bash and used the 'Christmas party' expense, but this was disallowed by an (exceptionally harsh) HMRC inspector as it was not held every year.

Swampette and I shall be going to a damn fine restaurant in town where I shall tell them to give me a total bill of no less than UKP300. Anything over that will be paid as a "separate meal" as cash etc. Taxis will also be paid in cash.

[Maslins]

Re Richard Cranium's general queries, I agree with TheFaQQer except for:

Can the Missus & I go to the Beefeater?

If the Missus isn't an employee, you can spend £150 in total, not each. If she is an employee, you can probably get away with £150 each.

Can the Missus & I take my mate and his Missus to a nice local restaurant?

I'd recommend not inviting them as they make the argument of "staff party" very weak when only 1/4 of the people there are staff.

If you must, I'd disallow the proportion relating to your mate and his Missus, again assuming they are not employees.

[BolshieBastard]

as always when this question crops up, some accountants say it is allowable and some say its not.

My advice is to allow upto £150 for each director \ employee and dont go a penny over.

[RichardCranium]

If the Missus isn't an employee, you can spend £150 in total, not each. If she is an employee, you can probably get away with £150 each.

'probably'? The Missus is on the payroll but I don't fancy splashing out on a meal and then getting taxed on it later.

I'd recommend not inviting them as they make the argument of "staff party" very weak when only 1/4 of the people there are staff. If you must, I'd disallow the proportion relating to your mate and his Missus, again assuming they are not employees.

I think I can see why the accountants said it's not worth the paperwork.

You remind me of my accountant. He's a cautious, miserable bugger who talks me out of claiming stuff that I used to claim. "Well, you never know, they might not like it. Best not to claim it." It's like having Hector as your accountant, FFS.