Staff/Director entertainment

Staff/Director entertainment

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I have been looking through HMRC manuals and accountingweb threads to assure myself that I am treating staff/director entertainment correctly.  What I am unsure of is whether I can put director only entertainment (them buying themselves meals not away from office and drinks out) on the PSA? (The company in question has a PSA set up for Staff entertainment and Working Lunches). Many thanks.

Staff Entertainment:
- Can claim VAT back
- BIK - can be covered by PSA
- Allowable deduction against corporation tax

Directors only Entertainment
- Cannot claim VAT back
- BIK – can be covered by PSA ?
- Dis-allowed against corporation tax

Replies (2)

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By Steve Kesby
15th Aug 2014 11:21

I'm not sure why...

... the expense would be disallowed for CT purposes, once it's been established as remuneration of the directors.

I'd say that it could also be included in a PSA, provided it satisfies the criteria in PSA1050; particularly that it is irregulat (see PSA1070).

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Replying to Justin Bryant:
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By Nthorne09
26th Sep 2014 14:35

Director only entertainment

Hi Steve,

Thank you for your advice you gave me last month on the treatment of Director only entertainment.  I hadn't thought to consider it as director remuneration instead just treating it as staff entertainment but not claiming VAT on it.  Since then I have been researching and talking with colleagues on doing this.  I can't find anything specifically on HMRC and my conversations with people just lead back to information of staff entertainment and whether it is allowable if its for a genuine business purpose.  

When you say I need to establish the Directors' entertainment as remuneration, would that just mean that the directors decide that their package includes the company covering lunches/drinks, which because of their irregularity and difficulty in allocating accurately to each director are then covered by the PSA for tax?  I then disclose this figure in the stat accounts and CT600 as part of the director remuneration figure.  The PSA currently covers staff entertainment and working lunches, do you think I would need to get it to specifically cover director only entertainment too?

Many thanks for you help

 

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