Allowable Expense - Entertainment / Room Hire

Allowable Expense?

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Hi there,

I would like to host a party for my clients and potenital clients, though I understand that entertainment is not an allowable expense. Therefore, I was thinking that I could hire the event space, i.e. a bar, and the guests could buy their own drinks and food. In this case would it be tax deductible, or is it still considered as "entertainment"? Thanks!

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By Chipette
01st Jun 2016 08:12

Hiring the bar to entertain the clients is still classed as "hospitality" so would not be an allowable cost.

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By Portia Nina Levin
01st Jun 2016 10:30

Quote:

Hiring the bar to entertain the clients is still classed as "hospitality" so would not be an allowable cost.

No it is not. Admittedly the OP has provided sweet [***] Adams in terms of background information, but if the event has a business purpose the expenditure will satisfy the wholly and exclusively test, and it is only the expenditure on the provision of entertainment (including hospitality of any kind) that falls within the ambit of the specific business entertainment disallowance. I would ordinarily expect "venue" cost to be allowable.

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Replying to Portia Nina Levin:
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By portal
01st Jun 2016 15:27

Thank you Portia for the response. So we could hire the venue and claim the expense. And if we chose to purchase drink/food on top of that, we would simply pay 20% corporation tax on it? Many thanks.

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Replying to Portia Nina Levin:
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By portal
02nd Jun 2016 01:08

So would the hiring of this venue (for our "meet market" - meeting existing and potential clients) be classed as an allowable expense, as long as the guests are paying for their own drinks? A few companies do this in our industry and I'm wondering is it for this same reason. Many thanks

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paddle steamer
By DJKL
01st Jun 2016 09:52

Not sure inviting clients/potential clients to a buy your own food/drink event would be an offer I could not refuse.

If it were me I would consider the purpose first and the tax deductibility second otherwise you may end up doing more harm than good.

Frankly, short of you booking what is left of Pink Floyd as the live act I am not not sure I would be that chuffed, and mindful to use your service,s if I received such an invitation; I really do not see the attraction, nor do I think it will project the image you seek.

But as I said, if you line up Pink Floyd then whole different ballgame.

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By Kevin Kavanagh
01st Jun 2016 13:19

Nice idea. But even though Roger Waters came back for Live 8, I think the best you could do is Gilmour and Mason as a duo.

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Replying to Kevkava:
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By DSP Financial Management
01st Jun 2016 21:29

Floyd is a brilliant idea, Strolling bones and Who would also be sought after here.
Perhaps a better idea, would be to hire an upmarket venue for a private function, buy your beers and wines from the various cash & carry warehouses or a retailer online such as one beginning with M, the cost of which and the canapés you provide should be taken out of the CT comp, and you enjoy a 40% saving on cost for the drinks alone.
Whether you may employ eye candy to serve your clients and charge that to chargeable profits is not one that I'm prepared to comment on here. . . . . if your business was Event Management rather than Accountancy you may have a reasoned argument.

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Replying to DSP Financial Management:
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By portal
02nd Jun 2016 01:06

Thank you for your response, though I'm not sure if it helps me entirely. If we hire a venue for existing and potentially new clients, as a "meet market", is that consider hospitality or is it an allowable expense? The event will take place in the US. Please advise. Many thanks.

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