I have a client who has what i believe to be a larger than normal entertaining expenditure in the year. I believe that these expenses are the director taking his family and friends out for meals and drinks, due to some of these being at the weekend and including child meals. He insists that they are him entertaining clients. How should i treat these items? How should i get confirmation from director that these are all business related.
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The point I think is that the director pays income tax on any personal entertaining, but not on business entertaining.
Remind him that he needs to log who he entertained and why as that's what HMRC will ask if they ever look.
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Don't forget to mitigate your risk, by writing a very explicit note in your letter to the client outlining your questions, and their answers on this topic, and outlining what might happen *if* for example they have made a silly mistake, and for example to pick at random, the meeting held at 2pm at the Dog & Duck on a bankholiday weekend with 8 cover which was attended by 3 minors, 1 seniors meal and 14 gallons of beer was not expressly for a business purposes HMRC may seek to tax this as a BIK"
Works a treat when you write it out in full.