Entertainment - is it worth expensing?

[northernladuk]

I can't imagine spending that much! But that is what I wanted clarification on, so thanks again for your time. I think this is the way I will go. I'm planning to take out a few client staff, seeing as my extension has been signed off so it's certainly a business development thing.

I don't think taking your client out for an xmas meal is classed as business development. It is more a social even to schmooze him but it isn't business.

[rmmc]

Let's start with ignoring who you take out (clients etc). Concentrate on whether it is staff entertaining which is allowable for CT relief. If it's open to all employees (assume yourself as the only employee) and it's an annual event i.e. Xmas, then you can claim up to £150 per head without BIK issues. If your company happens to invite 5 other people, then your company can expense up to £900 (claim for the actual cost not round sums which would coincidently added up to £900 exactly) and have it deducted for CT. Flip side to this is that it's coming from your company so it depends how generous you want to be even though it maybe allowable.

Oh, and don't forget to reward your accountant (Just kidding!!)

I am afraid this is not correct. Once again incorrect advice from this company or the user.

You can have a annual function and the limit is £150 per head attending the events. You can invite partners of the staff. However if you have one employee and 5 supplier, which is obvious that it is business entertainment. And staff present at party is merely a host. I would be surprised that any one can convince to the inspector otherwise.

Entertaining client using staff annual parties is breaking the rules and this could be tax evasion which is illegal. And it would be offence under money laundering rules too. I am surprised that Craig and his firm advocating this practice.

It may be stating obvious, this exemption applies to "Annual Events", not one of events such as 10th anniversary party etc. Also if you do not have this events regularly, then it would be difficult to prove that it is an annual events.

HMRC started picking on this point. Due to recent recession, some company did not organise the event, subsequently, they have had events and had difficulty convincing HMRC that it is an "Annual Events".

Also you can not claim vat on non employee portion of the annual function cost. Further on the VAT, if you only employee of the director and have a annual function, you can not claim the vat. As vat is blocked for directors only events.

[rmmc]

Staff entertaining is an allowable expense if it fulfils certain criteria. This link should help HM Revenue & Customs: Entertainment

Staff entertaining is an allowable expense if it fulfils certain criteria, however, it is taxable on employees unless it is an exempt (such as annual function).