Subsistance vs Entertainment?

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

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 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.

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.

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.

If the customer paid then you don't have an expense to disallow.

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

tim

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)?

Even though the net effect over time would have been "going Dutch"?

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)?

Where did I say you were a director?

You didn't, my mistake and sincere apologies.

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

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."

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

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

So you start to walk out without paying then.

tim