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• Are your VAT records in order?
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• Not very entertaining!

Not very entertaining!

Do you think your business can claim tax relief on any of the following?

1. Hospitality for a major supplier?
2. A substantial gift to a long-standing customer?
3. The Christmas party for your 12 staff?
4. A meal with a potential customer?

The answer is that expenditure on business entertaining (defined to include hospitality of any kind) and on gifts, is not allowable, except for:

• gifts (other than food, drink, tobacco, tokens, or vouchers) bearing a conspicuous promotional advert, and costing less than £50 per person per annum
• unrestricted expenditure on staff functions, provided it is wholly and exclusively for the trade. Note however, there are extra rules affecting VAT recoverability and possibly imposing tax charges on directors and certain employees

Therefore, only item (iii) qualifies for tax relief.

Note also that employees who incur expenses for business entertaining that are neither paid for nor reimbursed by the employer cannot claim a tax deduction on those expenses.

Be aware that where staff functions exceed £150 per person, there are further taxation consequences. Please contact us for details relevant to your situation.

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