Business Networking Expenses Disallowed

Business Networking Expenses Disallowed

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One of our clients has recently undergone a compliance check.  One of the issues that the HMRC officer raised was that expenses had been claimed for Business Networking meetings where breakfast or lunch was included.   Their view was that the payment was actually subsistence and was therefore disallowed. 

We tried to argue that the meeting was solely for networking - that the price would have been the same regardless of whether breakfast / lunch was consumed or not.  Their response was that the invoice said 'xyz lunch' not 'xyz networking' and therefore wasn't allowed.

Has anybody had any experience of successfully challenging this stance?

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By I'msorryIhaven'taclue
05th Jul 2011 16:35

Sole Trader?

"Their view was that the payment was actually subsistence and was therefore disallowed"

Is your client a sole trader?

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By juliestevens
05th Jul 2011 16:57

Sole Trader

Yes! Sole trader.

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By justsotax
05th Jul 2011 17:00

do networking myself - and also claimed on clients behalf....

not had any challenged....but would argue that the food is incidental to the 'meeting'....indeed it is the meeting you pay for (I don't recall that you can simply turn up, say you don't want a breakfast and then sit in for free - if you were say a guest - you pay the tenner whatever happens).

At the very minimum I would argue that part of the payment is for the room hire.....(i don't believe they hire out rooms for free....).  

The fact is that a networking lunch or breakfast is time rather than food related......(the concept is lost on the Revenue....they don't do working lunch or working breakfast - they just attend events where they get lunch, get motor expenses and discuss things that actually need action) - and perhaps they should consider the networking group called 'Business for breakfast'.....would they suggest that the yearly enrolement fee of £500+ be added back too because the invoice contains the word breakfast in it......!??!?!

Don't let them get away with this.....if someone has paid £10, it is at the very least part payment for the room - this cannot be compared to going for a business lunch to the local restaurant - these events are structured, with presentations, formal and informal networking etc.

 

 

 

 

 

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By Jack Spratt
06th Jul 2011 06:27

justsotax is right

This is ridiculous and I agree that you should not accept what HMRC is saying.

The food is incidental to the meeting (and often not worth eating!) and the meeting is held outside of "normal working hours" usually at a time when it is normal to take sustenance (like breakfast time) and anyway you can't go and not pay and if you pay ypu get the food.

Go for it and good luck

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By rockallj
06th Jul 2011 10:58

Fight this...........!

The food is incidental to the meeting, it is recompense for getting up at some unearthy hour and looking at other sleep-deprived networkers. Just because there is an element of subsistence (for HMRC read enjoyment therefore you cannot claim it!), the reason for your attendance is not to eat, but to network. Fight it vigorously.

 

 

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By kirapaige
08th Jul 2011 12:03

Stand firm -HMRC dont network!!

I had a similar issue with an enquiry a couple of years ago. Had to explain to HMRC that you are paying for a networking event and the cost is £x regardless of whether you eat the food provided or not.

As HMRC are not familiar with the concept of networking they need it clearly spelling out (in a phone call). HMRC should back down.

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By Robert Clubb
08th Jul 2011 12:31

Get A Receipt

Most Networking groups would be happy to provide a receipt confirming the amount paid is the membership fee and the food is Free!

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By beverly chester
08th Jul 2011 13:00

Free lunch?

 Many, many years ago in the good old days when the Business Enterprise people paid newly self employed persons a small weekly amount to support them through their first year of getting a business up and running one of my future clients approached them to go on a training day (a must) as he had been made redundant whilst working abroad and wanted to start up a new business ASAP. He was told there was not a place on the course for several weeks. I could see that this client was pretty desperate and was worried about what he might do next so I rang the Business Enterprise people myself to find out why there was such a delay. It appears that the only problem they had was that they had places available on the course but not enough lunches to go round! I said "sod the lunch he will bring a packed one" and after an enourmous amount of arguing they let him go on the course starting the following Monday! It was apparent that they thought the meal was a vital part of the course as it threw them in a total flap when I suggested he did not need to be provided with one. Obviously some course providers feel that the meal is an integral part of the course and if he had had to pay to go on the course I doubt he would have been charged less for taking his own lunch!

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By tonydorren
08th Jul 2011 15:44

Networking Breakfast

The view I take on this is that I am attending a meeting of my sales force, and therefore am away from my normal place of work, so can claim a reasonable amount for subsistence (I take it that there is no suggestion that this expenditure is Entertainment?).

Of the £10 cost to me for the event, a small proportion is held by the chapter and about £7.50 is paid for the venue and the breakfast. If we take the cost of venue out of the equation, what is left is about £5 for the breakfast - and this seems reasonable to me.

It might help the argument if BNI and other large networking organisations entered discussions with HMRC in order to get a sensible ruling on this.

 

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By Monsoon
08th Jul 2011 16:29

Definitely fight this!

As other respondents have said, the only reason people go to these is for the networking - not for the food! I can't add anything more to what has already been said other than - good luck, and I hope you get them to see sense!

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By lme
12th Jul 2011 13:08

HMRC advised me to claim 100%

I had the same dilemma. I was all set to claim (for myself & clients) the cost less £5, being the HMRC rate for a meal if you apply for a dispensation for a business that is itinerant. I spoke to one Mrs Brown from the dispensation dept at HMRC who looked into it and came back and said I shuld claim 100% notwithstanding the networking event included a meal, so long as the motivation is business. So I will def be claiming 100% for me and for clients in this situation.

Hope this helps.

-- Lydia

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