Travel, accommodation and entertaining expenses

[debbidoo]

Hi :)

Quick question for the accounts wizards here (I would ask my own lovely accountant, but she's flat-out and I don't want to bog her down even more! :D)

This is a limited company question.

Let's say I have to go on a business trip because I'm trying to win some new business, or I have to work on-site with a client for a few days, or I'm visiting a conference or exhibition that's relevant to my business. I use the company debit card to pay for train fares, a hotel and to take the client/potential client out for dinner, and I have a couple of cheap lunches, soft drinks or whatever while I'm travelling/working.

How is all this accounted for, for Corporation Tax purposes?

Does it all come out against normal day-to-day running costs like phone, PAYE etc, then CT is taken from the remaining profits?

Or, does the CT get taken first, and the expenses come out of the remaining profits?

Or, is it classed as directors' benefits and has to be accounted for some other way?

Also, is there some special way I would need to account for it, other than keeping receipts and posting it to whatever nominal codes are set up in Sage?

Thanks,

Debs :)

[oldeagleeye]

Hi Debs

It depends on your business how you can justify these espenses. Your own meals etc are supposed to be modest and they say that there are virtually no allowances for enterntaining clients which is utter bull-hit. I got pulled up on this once by HMRC and so I arranged to meet an inspector.

I was actually a mortgage broker at the time and by sheer coincidence this was about 10 days after I along with over 50 other brokers had be wined and dined in a marquee at Ascot by a major insurance company.

I think it cost them about £450 a head + travel. On top of this we all got a fancy leather briefcase full of other goodies which I had only taken a quick look at given the booze.

Anyway come the meeting I took that briefcase along with me along with the race programe and slapped it on the inspectors desk.

There - I said . There were 50 of us there - and it must ahve cost xxxxxx £50K to entertain us for a day and you are quibling at my £500 for a weekend in Spain to sign up a ground breaking deal with a Spanish estate agent to provide mortgages on Spanish property. End of dispute.

The problem with accountants today is that there is too much red tape by which they have to abide by and as such they don't seem to negociate with tax inspectors.

My suggetion to you then given your business sector - and I have no doubt our accountants would disagree - is book those expenses down simply to marketing - promotion or research and see if they get picked up.

BTW. All expenses come off before calculating CT.

Rob

[debbidoo]

Cheers Rob :) Great story! Did you win that day? If you had, wonder if HMRC would've tried to take 21% of it? :rolleyes:

[KM-Tiger]

Bit of a minefield, in my experience.

No problem claiming your expenses of travel and subsistence, though technically entertaining someone else isn't allowable against tax, I believe.

If the expenses are reimbursed by a Ltd then they will need to appear on your P11D unless you have a dispensation, which if you travel a lot would be worth getting. You can apply for the dispensation online, though expect to jump through some hoops. I know that one thing they don't like is directors being able to authorise their own expenses.

HMRC have some guidelines, if you trawl their website, of 'reasonable' amounts that can be claimed for subsistence etc.

[oldeagleeye]

That is the whole pointTiger in all aspercts of statuatory law - what is reasonable. Is it reasonable to employ a sports minsiter and their team and thend them to god knows where at enormous cost to bring the next world football cup play offs to Britain. I would say no but we all know the funds/expenses will be avaliable.

From Wmibledon through all amjor golf tournatments and race meeting to the Albert Hall. All are packed with Corprate Hiostpitaity boxes. Yet as far as small businiss is concerned youi have to justify spending £2 quid for a cheese sarnie on a 350 mile round trip top pul more business in.

Stand up for your rights guys.

Rob
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