Tyler Lappage
ACCA

Questions are pouring in on this topic:

What happens if I charge for non staff guests to attend the party? Can I offset that against the party cost and claim the rest? If I do that what about VAT?

If the company charged a fee for attending the party, which off-set the cost of non-employee entertainment, a good case could be made for the remaining cost to be allowed for tax purposes. Similarly, for VAT purposes, input VAT cannot be reclaimed on business entertainment, but is allowable for staff entertainment. If the costs can be readily apportioned, the element of VAT connected to staff can be reclaimed.

If I charge guests, how do I work out how much? Do I need to only charge for their meal and refreshment or must I charge for their share of the Buckingham House venue and Adele entertainment?

To be clear, charging non-employees a fee to attend is not necessary to get some tax relief. If the event is for employees and the costs of the event can be individually identified, as long as the costs were split correctly, you could have costs for both staff entertaining (allowable) and business entertaining (not allowable) on the same night.

The key point is the nature of the event; i) to reward staff + invite a few non-employees is okay, ii) to entertain clients + invite the staff along to serve drinks and take coats is not okay.

The cost of each meal is easily identifiable and could be analysed readily. The cost of hiring a global superstar to entertain is less easy to split between client and staff entertainment, so prepare for an argument with HMRC on how much of this is allowable.

If I have a staff only party, can I claim as much as I like? For example, a Nabarro Poole Ltd. party in Melbourne this year, on Boxing Day at the 4^th Ashes Test! 

I’ll leave this question to HMRC – ‘If the employer provides one annual function for employees no charge to tax arises if the cost of the event per head does not exceed £150/head.‘

So, if you’ve got a good travel agent and friends in Melbourne, you may be able to stay under this threshold. If not, the trip would be taxed as a benefit on the employee and would need close consideration on whether there would be tax savings gained for the company.

Nabarro Poole does not accept any liability for actions that readers may take and recommends obtaining specific professional advice before action.

For more information, please contact us through our website: www.NabarroPoole.com