I have a client who provides extra tutoring to children with a particular disability, as part of this she buys (small amounts) of sweets and stationery items as rewards to be given as various progress is made. Normally provision of food and drink to clients would be straight forward entertaining and marked as disallowed for tax purposes.
Do you think there is any scope here to class as catering, or otherwise as a legitimate business expense included in the cost of the services provided (there won't be any mention in the contracts issued that might categorically identify them as part of the service).
The total amount involved is only small, I just wonder if I can avoid excluding it.
Oh almost forgot, client is a sole trader, not incorporated (yet).
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I agree with Basil...
... but for different reasons.
The items aren't entertaining, as such, but they are potentially disallowable by the same legislation as gifts. The statutory disallowance of entertaining and gifts overrides the wholly and exclusively for the purposes of the trade rule.
However, in this instance it's possible to argue that they're not gifts at all, as they're part of the sale to the party paying for the service. See the penultimate paragraph of BIM45065.
Direct (ish) costs
Same concept as a dog trainer buying treats to give to dogs that they train - it's all part of the service. (Apologies to anyone offended by comparing children with dogs - I adore my dog and spoil her rotten). If the 'particular disability' is autism-related then the approach of rewarding behaviour is a well-known known one and any inspector who didn't understand it could be sent in my direction for a good slap.
So I agree with Basil and I'd put it in either direct costs (if you have them) or if they are miniscule 'sundries'. But definitely claim.
PR
I have had an argument with HMRC re a client in music PR.
As part of the job Meals, drinks etc are had with various people in the industry, sometimes they are recharged to client others built in to the cost of the job.
Normally entertaining, but we have successfully claimed as a direct cost.
Thanks for all the reponses everyone (and on a Saturday too!)
Flash - I had exactly the same though re: dog training, but I shan't be mentioning it to my client!
Cheers for the reassurance and I'll be making sure to include these as allowable costs in future :-)