Subsistance vs Entertainment?

Discussion in 'UK Accountancy' started by Fredxx, Mar 28, 2011.

  1. Fredxx

    Fredxx Guest

    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?
     
    Fredxx, Mar 28, 2011
    #1
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  2. Fredxx

    tim.... Guest

    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
     
    tim...., Mar 28, 2011
    #2
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  3. Fredxx

    Robin Guest

    If I'm away on work, and I share a meal with a customer, do I split
    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.
     
    Robin, Mar 28, 2011
    #3
  4. Fredxx

    Fredxx Guest

    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.
     
    Fredxx, Mar 28, 2011
    #4
  5. Fredxx

    Fredxx Guest

    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.
     
    Fredxx, Mar 28, 2011
    #5
  6. Fredxx

    Peter Saxton Guest

    Because the suggestion is silly.

    You are in the company of a customer so the costs are entertaining.
     
    Peter Saxton, Mar 29, 2011
    #6
  7. 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.
     
    Appelation Controlee, Apr 1, 2011
    #7
  8. Fredxx

    Peter Saxton Guest

    If the customer paid then you don't have an expense to disallow.
     
    Peter Saxton, Apr 1, 2011
    #8
  9. Fredxx

    tim.... Guest

    The customer would have an "entertainment" bill that he would not be able to
    offset against tax

    tim
     
    tim...., Apr 1, 2011
    #9
  10. 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.
     
    Ronald Raygun, Apr 1, 2011
    #10
  11. Fredxx

    Martin Guest

    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)?
     
    Martin, Apr 1, 2011
    #11
  12. Even though the net effect over time would have been "going Dutch"?
     
    Appelation Controlee, Apr 1, 2011
    #12
  13. Fredxx

    Fredxx Guest

    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.
     
    Fredxx, Apr 2, 2011
    #13
  14. Fredxx

    Peter Saxton Guest

    Where did I say you were a director?
     
    Peter Saxton, Apr 3, 2011
    #14
  15. Fredxx

    Fredxx Guest

    You didn't, my mistake and sincere apologies.
     
    Fredxx, Apr 3, 2011
    #15
  16. Fredxx

    tim.... Guest

    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
     
    tim...., Apr 3, 2011
    #16
  17. Fredxx

    Fredxx Guest

    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.
     
    Fredxx, Apr 3, 2011
    #17
  18. Fredxx

    Robin Guest

    Many thanks, I see your point but HMRC muddy the waters by saying:
    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.
     
    Robin, Apr 3, 2011
    #18
  19. 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
     
    Derek Geldard, Mar 19, 2012
    #19
  20. Fredxx

    tim.... Guest

    So you start to walk out without paying then.

    3 receipts will swiftly arrive.

    tim
     
    tim...., Mar 24, 2012
    #20
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