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Tax treatment of business entertaining

Business entertaining & sport

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A company director loves to play five-a-side football.  His two subcontractors apparently enjoy it, too.  So they got together with other tradesmen working on site in various capacities and the director hired a ground and organised regular weekly football meetings, usually followed by a pub to refresh and discuss business, among other things, the company bearing all costs.

Could this qualify for relief as a tax-free benefit under any rules?  If as I expect it does not, should it be treated as business entertaining and disallowed in the corporation tax computation?  Any possible problems?

Thank you ...

Replies (16)

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By Accountant A
17th Jan 2020 21:52

Looks like entertaining or just personal expenditure to go via the Director's Loan Account.

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RLI
By lionofludesch
17th Jan 2020 23:38

The company's not allowed to run a sports team for the welfare of its employees?

News to me ........

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Replying to lionofludesch:
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By Tax Dragon
18th Jan 2020 08:44

Only one employee. By definition, not a team.

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RLI
By lionofludesch
18th Jan 2020 09:24

Tax Dragon wrote:

Only one employee. By definition, not a team.

One employee. More than one worker.

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Replying to lionofludesch:
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By Tax Dragon
18th Jan 2020 11:52

"Employees" was your word. Admittedly, your choice of word may have been informed by legislation.

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Replying to lionofludesch:
Psycho
By Wilson Philips
18th Jan 2020 12:43

But, it would seem, only one director/worker of the company. I’m struggling to see the W&E purpose of paying for others to enjoy a game of football and a pint afterwards.

I’ll look at McQueen later

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Replying to Wilson Philips:
RLI
By lionofludesch
18th Jan 2020 13:17

Wilson Philips wrote:

But, it would seem, only one director/worker of the company. I’m struggling to see the W&E purpose of paying for others to enjoy a game of football and a pint afterwards.

I’ll look at McQueen later

Subcontractors are workers.

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By Tax Dragon
18th Jan 2020 13:30

S1299 refers to employees.

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By Tim Vane
18th Jan 2020 09:16

What would be your reasoning for disallowing? On the facts presented It is clearly not entertaining clients so is there some other reason you think it should not be allowable?

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Replying to Tim Vane:
Psycho
By Wilson Philips
18th Jan 2020 09:22

Company pays for the director and his mates to play footie and go for a pint afterwards. Wholly and exclusively for the purposes of the trade? I don’t know what the trade is, but I have my doubts.

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Replying to Wilson Philips:
RLI
By lionofludesch
18th Jan 2020 09:33

See McQueen - whether the director enjoys the activity is irrelevant. Though it does help if he prefers doing something else, such as sailing.

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By whitevanman
18th Jan 2020 10:39

Why do you refer to "entertaining clients"?
S1298 contains no such limitation.
If anyone believes it is anything other than private expenditure of the director, it will definitely be classed as "hospitality of any kind" and so disallowed. The employee exception would not apply (IMHO).

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By Tax Dragon
18th Jan 2020 13:29

whitevanman wrote:

If anyone believes it is anything other than private expenditure of the director....

I'm happy to believe it's a company expense W&E for the purpose of the trade.

whitevanman wrote:

...it will definitely be classed as "hospitality of any kind" and so disallowed. The employee exception would not apply (IMHO).

I don't know why those are the rules, but they are the rules. (And they weren't tested in.... weren't relevant to... McQueen. So I'm not sure that case is remotely relevant here. Well actually I am sure - that it's not.)

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Replying to Tax Dragon:
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By whitevanman
18th Jan 2020 13:48

On the little info given, I would not necessarily agree your first point but would certainly agree the rest. So, not allowable.

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By Tax Dragon
18th Jan 2020 13:59

In the first part, change "I'm" to "I'd be". Then (I think) it says what I'd intended it to say.

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By whitevanman
18th Jan 2020 14:25

In practise I would probably go along with you. What would play on my mind is that, having been a 5-a-side nut for many years, I know that one person often pays for the pitch but the others then each pay (say) £5 in cash. I wonder if that happened, would the director remember it when charging the company? Of course he would and it's just me being paranoid.

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