Client entertaining with personal interest

Entertaining clients at the races while Directors horse is running

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One of my clients has a significant amount of entertaining expenses for a director. This is not unusual for him however a number of these expenses are for trips, accommdation and meals eg while visiting racecourses in which one of his privately owned horses are running.

I'm fairly sure there's an issue here and believe I've read it in some HMRC guidance but I can't seem to find the reference to it on their website. 

Anyone have any experience of this or know the relevant guidance reference please?

Replies (7)

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By tonycourt
16th Nov 2017 11:53

I think the Interfish case will help you. The UKUT ruling is at http://taxandchancery_ut.decisions.tribunals.gov.uk/Documents/decisions/...

There's also stacks of commentary on it.

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By Accountant A
16th Nov 2017 11:59

PJWhite wrote:

I'm fairly sure there's an issue here

Which issue is it you are thinking there might be?

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By Tim Vane
16th Nov 2017 12:11

I assume you are asking about what BIK implications there are for the director, but your question is not clear. Can you clarify what you believe the issue is?

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Replying to Tim Vane:
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By PJWhite
16th Nov 2017 12:45

Tim Vane wrote:

I assume you are asking about what BIK implications there are for the director, but your question is not clear. Can you clarify what you believe the issue is?


Apologies for not being clear. Yes you are correct that it's the BiK elements that I feel could be an issue.

Unlike the Interfish ruling there is no business benefit claimed in the horse ownership.

The horse is owned by the director personally, no attempt is made to claim it or any of its costs as a business asset.

The client is a large manufacturing company and directors regularly entertain existing and potential clients with meals & drinks.

During large race meets (Cheltenham etc) the director has spent a number of days there with hotel stays, travel & meals/drinks claimed as business expenses. While there he has definitely entertained clients but I'm wary as to what can and can't be attributed as an expense or what is a benefit.

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By Portia Nina Levin
16th Nov 2017 12:53

Then the marginal expense of his being there to watch/show off his horse is a BIK. I suspect the costs would have been no more and no less though.

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Replying to Portia Nina Levin:
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By PJWhite
17th Nov 2017 17:49

Portia Nina Levin wrote:

Then the marginal expense of his being there to watch/show off his horse is a BIK. I suspect the costs would have been no more and no less though.

Sorry Portia, I'm going to act dim here and ask if you can clarify?

I'll give an example.

Director and 2 members of staff go to Cheltenham for the festival, during which the directors personally owned horse is running.
While there he entertains potential clients at the racecourse with food and drink.

In that visit he spent (made up figures here)
£1500 on his own accommodation.
£500 chauffeur limo
£1000 on food & drink for himself and guests.

Is there a BiK element here? I'm wary that the likes of the accommodation could be?

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By Portia Nina Levin
16th Nov 2017 12:18

The decision in Rockall may be relevant. It might not, but it is pure entertainment.

http://www.bailii.org/uk/cases/UKFTT/TC/2014/TC03767.html

You could also have a read of Chepstow Plant, but even though it concerns race horses, it is probably less relevant, and its far less entertaining.

http://www.bailii.org/uk/cases/UKFTT/TC/2011/TC01035.html

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