Business entertainment

[Stag Cozier]

In terms of being taxed on it. Does our company get taxed on business entertainment?

If it is deemed to be business related then it is an allowable expense for tax purposes i.e. it reduces your profit and therefore reduces your CT bill.

If it is deemed to be client entertaining (a jolly or social) then it is not an allowable expense for tax purposes i.e. it reduces your profit but then it has to be added back to your profit bumping it up. Example, you end up with £10,000 profit which is made up of the following:

Turnover £100,000
Expenses £90,000 (includes £100 non-business related entertaining)
Profit £10,000

A very simple tax calc. goes like this:

Profit £10,000
Add back £100 non business related entertaining

Profit subject to CT £10,100

If it was a business related entertainment, the above example would be £10,000 subject to CT as the add back wouldn't be carried out.

HTH

[Scrag Meister]

I think it is a case of being reasonable. Definitely a business expense.

Once a year, I took the folks in the same department that I worked near out for lunch when I got extended.

They always remember it, are considerably younger than me and will the hiring manager in a couple of years time.

If you were entertaining, 3 times a week, then I think that something would probably be said, but every so often won't hurt and as far as I am concerned is money well spent. Every little bit of good will, on top of being great at your job, means they would choose you over someone they don't know.

Time will tell if there is any substance to my theory.

[kellycell]

I don't think the OP was asking how to "fiddle" the books, it sounded like a legitimate enquiry about how to account for what is potentially a business expense.

I've often wondered about business entertaining too, I was under the impression that it wasn't allowable but according to the Inland Revenue:



It's obviously open to abuse but perhaps if the company employee kept notes/minutes of the the business discussed during the entertainment then there would be a pretty strong defense against HMRC trying to say that it was a social rather than business occasion.

Thank you, this is really useful.
In terms of being taxed on it. Does our company get taxed on business entertainment?

[Wanderer]

Don't ask for help with fiddling your books.

I don't think the OP was asking how to "fiddle" the books, it sounded like a legitimate enquiry about how to account for what is potentially a business expense.

I've often wondered about business entertaining too, I was under the impression that it wasn't allowable but according to the Inland Revenue:

In general, entertainment counts as business-related if its purpose is to:

* discuss a particular business project
* maintain an existing business connection
* form a new business connection

By contrast, entertainment of business acquaintances won’t count as business-related if its purpose is really social – even if there’s some discussion of business topics in the course of the entertainment.

It's obviously open to abuse but perhaps if the company employee kept notes/minutes of the the business discussed during the entertainment then there would be a pretty strong defense against HMRC trying to say that it was a social rather than business occasion.

[kellycell]

thank you. Do I pay tax on business entertainment?

[SueEllen]

If I take a client out for a meal/drink is it worth me putting this under business entertainment or subsitence? Do I pay tax on business entertainment ?

thank you.

Don't ask for help with fiddling your books.

If you are entertaining a client then it's business entertainment and should be put down as such.

If you are staying away from home or working long hours then your own meal or the meal of any of your employees can be put down as subsistence. If not then it's business entertainment also.

As usual this has been discussed before -
http://forums.contractoruk.com/accou...-expenses.html

[kellycell]

If I take a client out for a meal/drink is it worth me putting this under business entertainment or subsitence? Do I pay tax on business entertainment ?

thank you.