Seeking Guidance on Recording Condolence Gift

Seeking Guidance on Recording Condolence Gift Expense in Xero and VAT Treatment

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I hope this message finds you well. I recently sent a bouquet of flowers to a colleague, as a condolence gesture following the passing of his grandfather. I'm currently using Xero for my accounting, and I'm unsure about how to appropriately record this expense.

  1. Expense Category: What would be the most suitable expense category in Xero for recording a condolence gift? I was considering "Miscellaneous" or "Other," but I'd appreciate your insights.

  2. VAT Treatment: In terms of Value Added Tax (VAT), should I attempt to claim VAT on this expense? The Interflora bill for the flowers is £55.83 + VAT, totaling £67. I understand that certain personal or non-business-related expenses may not be eligible for VAT recovery, but I'm uncertain about the specific rules in this context.

  3. Tax Year: This is the first gift for the employee during the current tax year.

Your guidance on the above matters would be greatly appreciated. Thank you in advance for your expertise.

Replies (4)

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By Samantha20
02nd Dec 2023 12:55

We have an account called Staff Welfare where we post things like that, so it might be worth setting a new account up.

Yes, you can reclaim the VAT on the gift.

As the gift is over £50, it should really be taxed as a benefit in kind but if you had a paye inspection, I very much doubt that they could be bothered with it so I wouldn't tax it. The £50 should have gone up years ago but like most other tax allowances it hasn't so I wouldn't tax it for the sake of £17.

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Replying to Samantha20:
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By Tax Dragon
02nd Dec 2023 14:22

Might you decline to reclaim the VAT as a sort of quid pro quo?

It's not right, but it's 'fair' -and saves on the faff of a PSA (unless there already is one).

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Replying to Tax Dragon:
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By FactChecker
02nd Dec 2023 15:44

Interesting concept ... but of course 'quid pro quo' is an agreement between two or more parties (in which there is a reciprocal exchange of goods or services) - and good luck getting the PAYE and VAT collection teams onboard with the agreement.

But if you're only talking about assuaging the employer's own moral guilt, then it does have a nice sort of symmetry to it (and might placate HMRC in the unlikely event of it ever being discovered).

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By tom123
03rd Dec 2023 12:06

I would consider it staff welfare - and a perfectly legitimate thing for a respectable employer to spend their money on - so would be expecting it to be deducted as a cost for CT. I don't consider it a "non business" expense in that regard.

At this level of expense, I would claim the VAT without a backwards glance.

Other recollections may vary.

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