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Entertaining?

Entertaining or not?

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Hi all,

I have a client who operates through a limited company which is based in her home and treats mainly children and some adults, referred to her by charities, councils and some private organisations for mentoring and counselling. The children need to be seen in a safe and public place, so she meets them in coffee shops, McDonald type restaurants et cetera for drinks and sometimes a light lunch, which she says relaxes them helps them to open up to her. In the course of the meetings she will buy the drinks and sometimes a snack for them. She is concerned that these purchases would be deemed ‘entertaining’ and therefore disallowed for tax. I don’t see this as ‘entertaining’ as these purchases enable her to carry out her work effectively. Other opinions, if different to mine, would be appreciated and if not different, where would you allocate the expense?

Replies (22)

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By atleastisoundknowledgable...
25th Sep 2018 13:42

I’d say it was an allowable ancillary cost of providing the service. She could hardly meet them in a cafe and not provide refreshments.

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Replying to atleastisoundknowledgable...:
Portia profile image
By Portia Nina Levin
25th Sep 2018 15:34

atleastisoundknowledgable... wrote:

I’d say it was an allowable ancillary cost of providing the service. She could hardly meet them in a cafe and not provide refreshments.

And I'm happy to confirm that this is complete b0110x. RTFL.

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By andy.partridge
25th Sep 2018 14:16

When I take a client down the pub I find that it relaxes them and they open up to me.

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By Tim Vane
25th Sep 2018 15:15

Entertainment. It hits the definition and doesn't meet any of the criteria for exemption.

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By brian-scholar
25th Sep 2018 15:51

Thanks for your inputs.

But she is not entertaining the client. She needs to see these youngsters in a safe and private environment and drinks help her to bond with them so that she can write her reports for the clients. I see that PNL disagrees with Atleastisoundknowledgable but not why! Care to elaborate please.

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Replying to brian-scholar:
By Tim Vane
25th Sep 2018 15:59

brian-scholar wrote:

But she is not entertaining the client.

Well, if you are starting there you can get to anywhere. Why not start from a more real position. She IS entertaining the client. Read the sparse definition in the legislation. Then read the dictionary definition of hospitality and then explain why you don't think this case fits. Show your working.

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Replying to brian-scholar:
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By andy.partridge
25th Sep 2018 16:00

Is your client contractually obliged to supply refreshments, snacks and a light lunch?

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Replying to brian-scholar:
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By Portia Nina Levin
25th Sep 2018 16:58

I did elaborate. RTFL.

There is a definition of entertaining; "Entertaining includes hospitality of any kind". A cup of tea and a slice of cake is hospitality.

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By Matrix
25th Sep 2018 15:59

My understanding is that it is entertaining since there is insufficient quid pro quo.

This is a good read:

https://www.accountingweb.co.uk/any-answers/recruitment-agency-is-buying...

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Replying to Matrix:
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By brian-scholar
25th Sep 2018 16:28

I read some of that, differing opinions. And the quid pro quo, in my view, is that she is obtaining information about the youngster which she uses to write her report and get paid thereon.

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Replying to Matrix:
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By brian-scholar
25th Sep 2018 16:28

I read some of that, differing opinions. And the quid pro quo, in my view, is that she is obtaining information about the youngster which she uses to write her report and get paid thereon.

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Replying to brian-scholar:
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By andy.partridge
25th Sep 2018 16:33

How much less would she be paid if she didn't treat them?

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Replying to andy.partridge:
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By brian-scholar
25th Sep 2018 16:59

I don't know and surely that's hardly the point.

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Replying to brian-scholar:
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By andy.partridge
25th Sep 2018 17:12

Oh, Ok you just want everyone to agree with you. Not sure why you asked the question, then.

If it's any comfort one of my very first clients, a wily character, sat me down and told me how all his restaurant bills were his 'materials' without which he wouldn't get any business. It's tough disappointing people who think they pay you to keep them happy.

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Replying to andy.partridge:
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By brian-scholar
25th Sep 2018 18:14

Of course, most people will want to think that they are right but I wanted opinions, which I got and which are geatly appreciated. I was just playing 'Devil's advocate' to try and cover all the areas I thought relevant.

But thank you all for your comments and references.

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Replying to brian-scholar:
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By Mr_awol
26th Sep 2018 03:03

Playing devils advocate? Don’t you mean trotting out the clients nonsense about it not being entertaining?

How these cafes count as a ‘private place’ or why these kids need a Big Mac before they will open up is also highly questionable

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Replying to Mr_awol:
By kenny achampong
26th Sep 2018 14:00

I know my wily clients would insist that they take all the food and drink outside to the homeless and not consume anything themselves and so the cost is purely to rent that table space. And also keep the kids healthy.

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Replying to andy.partridge:
By kenny achampong
26th Sep 2018 14:06

A script writer on my books cheekily tried to argue that all his drinks in pubs are allowable because thats where he sits, observes, and writes. I talked him out of that, and then found a cobblers shoe repair bill which I also questioned, and he said 'well I have to do a lot of walking to the bar'

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By WhichTyler
25th Sep 2018 22:48

Slightly off topic, but why does she have to see them 'in a public place'; this seems a bit odd and possibly not 'safe' if children are talking about personal issues in a Macdonald's.

Most mentors/counsellors/therapists use private rooms that they pay for, don't they?

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By mbee1
26th Sep 2018 08:53

Slightly off topic again but there are safeguarding issues here which is why she probably sees them in a public place. If she were to see them in a consulting room I suspect another person would need to be there which is clearly going to increase her costs, far more than buying them a soft drink and a snack.

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Replying to mbee1:
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By WhichTyler
03rd Oct 2018 14:29

So her profit margin is more important than client privacy?

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