Hi All,
I have a client who wishes to purchase 2 season tickets for Manchester United and they will get issued to 2 customers based on raffle tickets issued with purchases over a certain amount ( a promotional campaign ). In my opinion, this is ok as it is a form or marketing and promotion. This raffle will be advertised so I have no reason to believe it is for personal use (unless thy rig the draw which cant be proven!
Anyone think otherwise?
Replies (18)
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I think...
... that it's expenditure on business entertainment, and do disallowable. Of course, I use the word "entertainment" in its tax context.
Agree with Steve
Isn't there an extensive waiting list for season tickets? Ah . . . maybe not now.
Not allowable
I only go for the rugby league so can echo Steve's caveat on the entertainment definition.
I agree with him that it would be disallowed as business entertaining.
Watch out for criminal offences under the lottery laws too. Don't be taking any stake money and stop calling it a raffle.
May be deductible
I tend to agree with the OP.
A prize of the nature described need not be entertainment especially as the raffle is only open to customers, in other words there is an exchange of value - a quid pro quo as HMRC puts it.
See: http://www.hmrc.gov.uk/manuals/bimmanual/bim45085.htm
Had a similar case some years ago with an estate agent who suggested entry into a prize draw for anyone who put the sale of their home through them. However the genius twist to the scheme, suggested by the top dog in the firm, was that while it would attract custom it wouldn't cost much as there wouldn't actually be a prize; they would just publish the name of a fictitious winner each month - lovely people!
Crooked competition organisers....
Had a similar case some years ago with an estate agent who suggested entry into a prize draw for anyone who put the sale of their home through them. However the genius twist to the scheme, suggested by the top dog in the firm, was that while it would attract custom it wouldn't cost much as there wouldn't actually be a prize; they would just publish the name of a fictitious winner each month - lovely people!
Reminds me of the Daily Mirror bingo competition to win a million pounds when the Mirror was owned by Robert Maxwell. Competition ran for a while, numbers being issued each day, winner due soon. Sales increasing massively. Then the paper just announced one day "this competition has now finished" - no winner, no prizes, no further reference to it. Pre-internet though - limited scope for public outrage (late 80's maybe?).
An estate agent not telling the truth,never!! Have dealt with so many over the years and have yet to find one that tells even somewhere near the truth.Cant stand them
See http://www.hmrc.gov.uk/manuals/bimmanual/bim45075.htm
to me that makes it allowable as a discount on sales made.
Season ticket
I looked this up recently and found that a raffle with a prize was allowable as marketing.
However I don't think it is possible for different customers to attend the football matches each week if the tickets are in the business' name.
Season Ticket Rules
Usually a normal season ticket has certain rules on it saying that it is a non-transferable thing (and I speak as a Man City season ticket holder so slightly questioning why anyone would want to enter the raffle). Not that people don't swap them around, just that they legally shouldn't. But if it's a corporately purchased s/t then most clubs will recognise it as such and you will pay a little bit more for the pleasure. You will be part of the prawn sandwich brigade rather than the meat-and-potato pie normal fans and the vast groups of tourists. And all clubs are desperately keen to bring in more corporate arses.
But then the powers that be would be happy with anything that gets bums on seats these days. They have been offering incentives to get people to buy s/t's, offering half-season deals and reductions to one's own s/t for bringing in new punters. Rats, sinking ship etc etc.
Possible BIK?
Just to widen the question, could HMRC see this as providing a benefit in kind to a third party? If a director or employee of a customer had use of the tickets, surely it could be viewed as via their employment.
Entertaining
Sounds to me like the season ticket is being/has been bought by the company, and will be held by the company for the purposes of customer entertainment.
Rather than simply choosing which customers to entertain, the OPs client is drawing lots from a pool of customers who have spent over a certain threshold.
If the company in question bought individual tickets to a match and handed them to the 'winner' of the draw then the promotional angle might be valid. As it stands, I don't think it is relevant at all.
Register?
Some years ago I was involved a proposed raffle for the company that I worked for. At that time all reffles had to be registered with an organisation called something like the " lotteries commission". Has this now be abolished?
Gambling Commission
I would suggest that you tell your client to double check on the Gambling Commission website in case they need to register and what rules they need to follow when they run the raffle.
http://www.gamblingcommission.gov.uk/
it is business entertaining, but ...
The season ticket is purchased for the purpose of providing hospitality to non staff; it therefore represents hospitality which is disallowable.
However, how much is disallowable depends on whether there is sufficient quid pro quo to net off the disallowable figure. The Revenue manuals have a decent amount of guidance on the concept of quid pro quo and it seems to me that if you can get to a position where the client is contractually obliged to provide the entertaining as part of sale (so that the customer has in effect paid for the hospitality) then it will not be disallowable. The requirement to spend over a certain amount would suggest there might be something to explore on the point.
Breach of season ticket T&Cs
This would definitely be a breach of the season ticket Terms and Conditions.
If the ticket being purchased was a hospitality class ticket (much more expensive) rather than a regular season ticket this may be permissible but the OP definitely needs to be cautious otherwise.
Marketing expense
I would see this very much in the marketing expense category as it is a Prize Draw to encourage customers to purchase more. I'm sort of assuming some of the prize draw type items mentioned below would be on this, particularly the option to enter this without purchase.
There seems to be certain small print that seems to have to go on these. Usually you can enter for nothing by sending a stamped addressed envelope to a PO Box address, I think that might be so you don't have to attribute some of the value of the sale to the prize draw and muck up your VAT return etc. You do need to say not open to directors, employees or 'connected persons' (family etc) this is to avoid a PSA/P11D issue and of course needs checking before prizes are given out. You'll want some on there to comply with whatever the business season ticket rules are (e.g. you haven't been excluded from being able to attend games etc). I believe there are good reasons for some of the others one tends to see as well, so you do need to look into them or caveat accordingly.
Entertainment or not....
.....they can, of course, do what they like with the tickets once they have them, but its not allowable.
Talk about contrived situations, no wonder Joe Public has a dim view of some accountants, straining and stretching every sinew to avoid a tax bill on the employer or employee or fortunate (?) customer.