What counts as a social function

[THEPUMA]

I think the point most people forget is that as well as complying with the rules specific to annual social events, in order for the expense to be corporation tax deductible, it also has to pass the general corporation tax deductibility test which is that the expenditure has to be incurred wholly and exclusively for the purpose of the trade. So if you took all your mates out on a bit of a jolly, it's probably not going to pass that test.

The other point worthy of note is that, if you go over the £150pp threshold, all is not lost, as employee contributions get deducted. So if you spend £160pp on both the director and his wife, but the director contributes £20 to the company towards the event, it would still be exempt.

PUMA

[TheFaQQer]

Thanks Clare. What do you base this on?

From the same source TF gave you ages ago in this thread

FTFY

[Old Greg]

FTFY

And I have run this past my accountant and the summary is that this tells you the cost per head but where does it say that the £150 exemption is extended to non-employees?

[TheFaQQer]

And I have run this past my accountant and the summary is that this tells you the cost per head but where does it say that the £150 exemption is extended to non-employees?

Income Tax (Earnings and Pensions) Act 2003, section 264 (4). In particular (4)(b), as quoted last night:

(4)For the purposes of this section, the cost per head of a party or function is the total cost of providing—

(a)the party or function, and

(b)any transport or accommodation incidentally provided for persons attending it (whether or not they are the employer’s employees)

The act is pretty clear - the cost per head of the party or function is the total cost of the party / function and transport / accommodation provided for those attending, whether they are employees or not.

I'd ask your accountant what it is in ITEPA that they believe indicates that non-employees are not covered.

[northernladuk]

Not wanting to stop this eternal circle in it's tracks wouldn't it be time to take a pragmatic approach? The amounts we are talking about here are peanuts so is it worth risking the wrath of HMRC by trying to claim your kids/cousins in your works xmas do. No employer is (generally) going to invite your kids so leave it at that.

Some sites do mention partner enough times to convince me it would be acceptable and at worst prove I have done due diligence. This makes the risk so small I am happy to limit it to me and partner.

Is it worth going round in circles for the sake of £60 max?

[MarillionFan]

Not wanting to stop this eternal circle in it's tracks wouldn't it be time to take a pragmatic approach? The amounts we are talking about here are peanuts so is it worth risking the wrath of HMRC by trying to claim your kids/cousins in your works xmas do. No employer is (generally) going to invite your kids so leave it at that.

Some sites do mention partner enough times to convince me it would be acceptable and at worst prove I have done due diligence. This makes the risk so small I am happy to limit it to me and partner.

Is it worth going round in circles for the sake of £60 max?

Just because you live on your own.

[psychocandy]

I guess this is up to you. A few meals out with no reason whatsoever is pushing it IMO. There are enough instances to go out in a year with extensions, birthdays, company birthdays, yearly celebrations (St Georges day etc) to be clever enough to use these and not totally rip off the process.



How can you be in contract and not an employee of your LTD?

Of course, you mean St Davids day there, dont you? :-)

Yes. For tax reasons, not an employee this year, just a Director. Next year I will be on £7K salary though.

[ASB]

Not wanting to stop this eternal circle in it's tracks wouldn't it be time to take a pragmatic approach? The amounts we are talking about here are peanuts so is it worth risking the wrath of HMRC by trying to claim your kids/cousins in your works xmas do. No employer is (generally) going to invite your kids so leave it at that.

Some sites do mention partner enough times to convince me it would be acceptable and at worst prove I have done due diligence. This makes the risk so small I am happy to limit it to me and partner.

Is it worth going round in circles for the sake of £60 max?

You party pooper...

The (minor) problem as I see it is if "ooh why risk it it's only £50" prevails often enough then over time that becomes a worthwhile sum. A counter view to that might be "well it's only £50, so I'll claim it and worry later".

Certainly I have funded social functions where ex wife (and employee) had one guest, I had a different one. Ok, yes it does fall under the ttp banner, but in the investigation that was covered (and it was very in depth). HMIT really couldn't give a stuff. (Though this might only be because there were other things he could give a stuff about ).

[ASB]

Of course, you mean St Davids day there, dont you? :-)

Yes. For tax reasons, not an employee this year, just a Director. Next year I will be on £7K salary though.

The salary doesn't of itself make you an employee.

[northernladuk]

Certainly I have funded social functions where ex wife (and employee) had one guest, I had a different one.

You can claim it against swingers parties???