Subsistance vs Entertainment?


F

Fredxx

If I'm away on work, and I share a meal with a customer, do I split the bill
50:50 to Subsistence:Entertainment, assuming a nominal equal split in cost
between myself and the customer?
 
T

tim....

Fredxx said:
If I'm away on work, and I share a meal with a customer, do I split the
bill 50:50 to Subsistence:Entertainment, assuming a nominal equal split in
cost between myself and the customer?
No you don't.

The cost of the employee meal counts as part of the entertainment costs, and
may even attract a tax charge on the employee if the "entertainment" doesn't
pass the "necessary for the business" tests.

tim
 
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R

Robin

If I'm away on work, and I share a meal with a customer, do I split
No you don't.

The cost of the employee meal counts as part of the entertainment
costs, and may even attract a tax charge on the employee if the
"entertainment" doesn't pass the "necessary for the business" tests.
I was unclear about the context of the question so wd just add that, in
addition to the impact on employees/directors, the specific provisions
bear on computing profits for income/corporation tax purposes; and then
there are too the specific provisions for VAT.
 
F

Fredxx

tim.... said:
No you don't.

The cost of the employee meal counts as part of the entertainment costs,
and may even attract a tax charge on the employee if the "entertainment"
doesn't pass the "necessary for the business" tests.

tim
Many thanks for the quick reply.

Are you implying I should have asked for 2 bills, one for the meal whilst a
couple of hundred miles away, ie subsustence, and another for entertainment?
It all sounds a bit silly.
 
F

Fredxx

Robin said:
I was unclear about the context of the question so wd just add that, in
addition to the impact on employees/directors, the specific provisions
bear on computing profits for income/corporation tax purposes; and then
there are too the specific provisions for VAT.
Many thanks, I am aware that I can't recoup VAT in entertainment, and
entertainment costs are effectively added to profits for Corporation Tax
computations.
 
P

Peter Saxton

Many thanks for the quick reply.

Are you implying I should have asked for 2 bills, one for the meal whilst a
couple of hundred miles away, ie subsustence, and another for entertainment?
It all sounds a bit silly.
Because the suggestion is silly.

You are in the company of a customer so the costs are entertaining.
 
A

Appelation Controlee

Because the suggestion is silly.

You are in the company of a customer so the costs are entertaining.
So what would be the position if the customer picked up the bill?

Years ago I used to make regular trips in the company of one customer
and we used to take it in turns to pay for meals.
 
P

Peter Saxton

So what would be the position if the customer picked up the bill?

Years ago I used to make regular trips in the company of one customer
and we used to take it in turns to pay for meals.
If the customer paid then you don't have an expense to disallow.
 
T

tim....

Appelation Controlee said:
So what would be the position if the customer picked up the bill?

Years ago I used to make regular trips in the company of one customer
and we used to take it in turns to pay for meals.
The customer would have an "entertainment" bill that he would not be able to
offset against tax

tim
 
R

Ronald Raygun

Peter said:
If the customer paid then you don't have an expense to disallow.
But the customer would have.

Presumably if, instead of taking turns to pay, they just "went Dutch"
each time, then neither the customer nor the client would be
"entertaining" the other, and it would count as subsistence for both
of them. If that is true (is it?) it shows how silly the rules are.
 
M

Martin

Ronald Raygun said:
But the customer would have.

Presumably if, instead of taking turns to pay, they just "went Dutch"
each time, then neither the customer nor the client would be
"entertaining" the other, and it would count as subsistence for both
of them. If that is true (is it?) it shows how silly the rules are.
I would assume that's OK if both are away from their respective bases.

But I don't share the views of others here. I read the original post as meaning Fredxx was away on business anyway, and just happened to meet a customer in the evening. Surely, his own meal would qualify for relief (subsistence) in that circumstance? If not, then wouldn't his travel expenses for the entire trip be disallowed also (dual purpose)?
 
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A

Appelation Controlee

The customer would have an "entertainment" bill that he would not be able to
offset against tax
Even though the net effect over time would have been "going Dutch"?
 
F

Fredxx

Ronald Raygun said:
But the customer would have.

Presumably if, instead of taking turns to pay, they just "went Dutch"
each time, then neither the customer nor the client would be
"entertaining" the other, and it would count as subsistence for both
of them. If that is true (is it?) it shows how silly the rules are.
I would assume that's OK if both are away from their respective bases.

But I don't share the views of others here. I read the original post as
meaning Fredxx was away on business anyway, and just happened to meet a
customer in the evening. Surely, his own meal would qualify for relief
(subsistence) in that circumstance? If not, then wouldn't his travel
expenses for the entire trip be disallowed also (dual purpose)?


--
Many thanks for your view.

For one I'm not a director of this company as Peter asserted but that's a
mute point and I don't see as relevant.

I see no reason why a susbsistence expense, and an entertainment expense
(not allowable for VAT and Corp tax relief) can't be split. I haven't seen,
or been shown any HMRC rule which disallows this.
 
P

Peter Saxton

Many thanks for your view.

For one I'm not a director of this company as Peter asserted but that's a
mute point and I don't see as relevant.
Where did I say you were a director?
 
T

tim....

Fredxx said:
I would assume that's OK if both are away from their respective bases.

But I don't share the views of others here. I read the original post as
meaning Fredxx was away on business anyway, and just happened to meet a
customer in the evening. Surely, his own meal would qualify for relief
(subsistence) in that circumstance? If not, then wouldn't his travel
expenses for the entire trip be disallowed also (dual purpose)?


--
Many thanks for your view.

For one I'm not a director of this company as Peter asserted but that's a
mute point and I don't see as relevant.

I see no reason why a susbsistence expense, and an entertainment expense
(not allowable for VAT and Corp tax relief) can't be split. I haven't
seen, or been shown any HMRC rule which disallows this.
It's the desire to "account" for the expenses half as a company expense
that's the problem.

I agree with you there is no reason why a subsistence bill cannot be split
out of a joint bill with someone else.

What scuppers you is the attempt to claim the other half as company
entertainment rather than personal entertainment (or even paid for by the
other party) that's the problem.

By making the second half of the bill corporate entertainment you
immediately make the first half the same (in the eyes of the revenue).
IANAL but I don't see any leeway here.

tim
 
F

Fredxx

tim.... said:
It's the desire to "account" for the expenses half as a company
expense that's the problem.

I agree with you there is no reason why a subsistence bill cannot be
split out of a joint bill with someone else.

What scuppers you is the attempt to claim the other half as company
entertainment rather than personal entertainment (or even paid for by
the other party) that's the problem.

By making the second half of the bill corporate entertainment you
immediately make the first half the same (in the eyes of the revenue).
IANAL but I don't see any leeway here.
Many thanks, I see your point but HMRC muddy the waters by saying:
"When you entertain both employees and other business contacts together, you
can only reclaim VAT on the proportion of your expenses that are not used
for business entertainment and are used for business purposes."
http://www.hmrc.gov.uk/vat/managing/reclaiming/entertainment.htm

Which does leave me to believe I can split the costs/expenses.
 
R

Robin

Many thanks, I see your point but HMRC muddy the waters by saying:
"When you entertain both employees and other business contacts
together, you can only reclaim VAT on the proportion of your expenses
that are not used for business entertainment and are used for
business purposes."
http://www.hmrc.gov.uk/vat/managing/reclaiming/entertainment.htm
Which does leave me to believe I can split the costs/expenses.
yerrbut ....how difficult do you want to make your tax affairs? for you
and your employer? Eg I think you may have missed the full implications
of the point about duality of purpose for your ability to get a
deduction for our expenditure on the meal for the customer.

But - as so often - further and better particulars are needed. For
example, can you justify expenditure on the meal being "business-related
entertainment" in the sense HMRC use the term in connection with
employment income? (see eg
http://www.hmrc.gov.uk/paye/exb/a-z/e/entertainment.htm)

Also, do you get reimbursed by your employer? If so, bear in mind that
if you get it wrong your employer stands to suffer potentially rather
more in terms of eg employer compliance settlement for PAYE/NICs/P11D
failure, loss of dispensation etc.
 
D

Derek Geldard

The customer would have an "entertainment" bill that he would not be able to
offset against tax
In similar vein, sometimes we do heavy installations away from our home
base. About Ca 20 years ago the firm's accountants began proclaiming
that if say 3 engineers were working away from their base, then that
must generate 3 seperate expense claims each with supporting receipts or
tax and NI will fall due on the full amount.

OTOH Some restaurants flatly refuse to split the bill for a table
between individual diners.

Crazy ...

DerekG
 
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T

tim....

Derek Geldard said:
In similar vein, sometimes we do heavy installations away from our home
base. About Ca 20 years ago the firm's accountants began proclaiming that
if say 3 engineers were working away from their base, then that must
generate 3 seperate expense claims each with supporting receipts or tax
and NI will fall due on the full amount.

OTOH Some restaurants flatly refuse to split the bill for a table between
individual diners.
So you start to walk out without paying then.

3 receipts will swiftly arrive.

tim
 

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