Sales Staff Incentives

Overseas trips

Didn't find your answer?

Just taken on a new client who starting from this year wants to offer an overseas holiday to Dubai for his sales team if they hit their target. When I told him about the tax implications for them/Ltd company his response was that his competitors who are much larger seem to do the same and the employees arent tax. If he told his team they would be taxed at either 40% / 45%, he thinks they would leave etc. I guess if you are funding nearly half the price of the holiday, it does seem less appealing and if it were me I would want the cash instead of spending even more time with my colleagues /boss on holiday! 

I guess I wonder if these competitors are using a PSA on the basis that it is only once a year but that makes it very expensive for the employer. Or they are just not declaring this as a benefit but I dont know how that could ever be achieved....

 

Replies (11)

Please login or register to join the discussion.

avatar
By paul.benny
14th Mar 2024 14:20

I've spent nearly all my career with larger companies and all sought to be tax compliant on matters like this. I don't mean that they did everything perfectly but on something like this it would be trapped and the tax grossed up. Sometimes incentives like this were changed once it was realised that the tax almost doubles the cost.

I would also challenge Client on the whole idea. I've no particular desire to go to Dubai and if I'm going with colleagues it's not a holiday. This trip would not incentivise me.

Thanks (2)
Replying to paul.benny:
avatar
By Paul Crowley
14th Mar 2024 19:42

One of my senior staff members chooses not to come to the firm's do. I sometimes think employers forget that staff value their free time

Thanks (2)
paddle steamer
By DJKL
14th Mar 2024 14:31

They will have to disguise it as a staff training conference or similar. Would that work, hmmn, is it what companies do, yes.

Thanks (1)
Replying to DJKL:
avatar
By Tax Dragon
14th Mar 2024 14:50

Are you encouraging the OP to give advice that, if taken, might oblige the OP to make a SAR and consider the engagement?

OP, I agree with Paul. Note also that Ss337-340 require obligation of attendance, not offers of holidays.

Thanks (0)
Replying to Tax Dragon:
paddle steamer
By DJKL
14th Mar 2024 15:00

I am not encouraging anything, hence the hmmn, I am articulating what lots of companies do.

Thanks (0)
Replying to DJKL:
avatar
By Tax Dragon
14th Mar 2024 15:07

You have evidence? Such companies presumably don't have accountants.

Thanks (0)
Replying to Tax Dragon:
paddle steamer
By DJKL
14th Mar 2024 16:24

I am pretty sure there are lots of conferences etc with duality of purpose, I certainly saw some in the 80s when I worked on larger company audits, maybe everyone is whiter than white these days but I somehow doubt it.

It is amazing what can be slid into a large marketing budget, I recall attending the Bell's Scottish Open in the 90s with my other half , it was at Gleneagles as her employers had a marquee there with lots of drink, was she anything to do with sales, no, she was a Quant Analyst, a backroom index etc creator/analyst ,but we were there on a freebee (Drink/Food/ Tickets/Parking) as were plenty of other staff. (Large corporate employer)

Some of the more recent rugby jollies I have attended at Murrayfield as a guest are at times skating from business entertaining to staff jolly.

In one of our entities we also used to charter out a large crewed yacht in the Med to others/third parties, back then E10,000 a week, a fair few of the renters rented from us through/via their companies, so yes, pretty sure such practices happen, ought they, probably not (but not my concern), but they do.

The merging of notionally business events with staff entertaining is pretty old hat, surprised you have never observed. For instance the staff Christmas nights out, bring partner, that I attended with other half usually had an unlimited open bar, food etc which all certainly breached lots of thresholds re staff entertaining (Treble cognac, no problem) but never a penny seen on a P11D and that was with some pretty large banks she worked for over the years. (They kept being taken over so she had a few employers over the years)

So either everyone cleaned up their acts over intervening years or they are now better at hiding such activities.

Thanks (1)
Replying to DJKL:
avatar
By Tax Dragon
14th Mar 2024 16:59

Putting a triple cognac on a specific employee's P11d would be ridiculous. That's what PSAs are for. Your allegation holds water only if you know, not only that tax was correctly due in any case you cite as an example, but that no PSA was made in that specific case and the tax due went unpaid.

Two more points: OP here is the accountant, which carries certain obligations of its own; this entire subdiscussion is irrelevant to the OP, as you have already acknowledged.

Thanks (0)
Replying to DJKL:
avatar
By paul.benny
14th Mar 2024 15:54

I have attended sales meetings and the like around Europe. But the attendees were from around Europe and the great majority of time was definitely work related ( presentations etc). And even the rest was largely networking with colleagues that I rarely saw face to face.

Yes, a bit of fun was had. No it wasn't holiday.

Thanks (0)
avatar
By David Ex
14th Mar 2024 18:01

Quite a common idea, apparently. You could contact this poster and have a chat:

https://www.accountingweb.co.uk/any-answers/staff-holiday-sales-incrntive

Thanks (0)
Replying to David Ex:
avatar
By FactChecker
14th Mar 2024 19:43

Has Jigs been hijacked?

Thanks (2)