Restaurant – Business Expense

[gajus]

I've been reading the forum a lot, and I am curious to know the following information, since it was not clearly covered:

* can a business related meal be paid using business card?

Scenario:

I own a Ltd company, I am the only employee. I want to have a dinner during my working hours, can I make it business expense?

Scenario two:

I own a Ltd company, I am the only employee. I want to invite my client to a dinner, to discuss project details. Is that a business expense?

In either of the cases, is keeping the receipt enough?

 

[Ian J]

Neither of your scenarios are allowable business expenses for tax purposes.

Whilst lunch or dinner would be allowable if working away from the office entertaining customers is not

 

[gajus]

Neither of your scenarios are allowable business expenses for tax purposes.

Whilst lunch or dinner would be allowable if working away from the office entertaining customers is not

Could I get a broader definition of "working away from office", e.g. my office is registered in another city & lately I barely I come there at all.

Though, I don't understand why having a meal during office hours is not business expense.

 

[Robert Pearce]

Whether something is a business expense and whether your company can claim corporation tax relief on it are two different issues.

Scenario:

I own a Ltd company, I am the only employee. I want to have a dinner during my working hours, can I make it business expense?

Yes, you can put the cost of meals through the business but, unless it is related to business travel, there will be tax consequences. It will be treated as a benefit in kind so the company will pay Class 1a national insurance and it will affect your personal tax situation:

http://www.hmrc.gov.uk/paye/exb/a-z/m/meals.htm#2

Here is some basic guidance as to what HM Revenue & Customs mean by business travel:

http://www.hmrc.gov.uk/paye/exb/a-z/t/travel.htm#1

Scenario two:

I own a Ltd company, I am the only employee. I want to invite my client to a dinner, to discuss project details. Is that a business expense?

Yes, this is client entertainment. It can go through the business but you won't get tax relief on it.

 

[gajus]

Yes, this is client entertainment. It can go through the business but you won't get tax relief on it.

I guess its about time to get an accountant (I've had my company open for 3 months only, and till now my only concern was to keep all receipts once I pay for anything). However, I don't need a full-time accountant. What are my options?

 

[Truemanbrown]

I guess its about time to get an accountant (I've had my company open for 3 months only, and till now my only concern was to keep all receipts once I pay for anything). However, I don't need a full-time accountant. What are my options?

I would try and set up a meeting and go through your records before recommending a system which will be easy for you to use.

You would then do most of the accountancy/bookkeeping work before I do an annual check on the accounts and then provide you with statutory accounts and tax returns.

 

[gajus]

I would try and set up a meeting and go through your records before recommending a system which will be easy for you to use.

You would then do most of the accountancy/bookkeeping work before I do an annual check on the accounts and then provide you with statutory accounts and tax returns.

Essex is a bit too far away. I'd prefer accountant in London or not too far away. I guess, having accountant, requires to meet him from time to time.

 

[elaine@cheapaccounting]

Essex is a bit too far away. I'd prefer accountant in London or not too far away. I guess, having accountant, requires to meet him from time to time.

You do not need to meet your accountant - you could have a remote on line accountant.

Oh and accountants can be female these days

 

[Truemanbrown]

Essex is a bit too far away. I'd prefer accountant in London or not too far away. I guess, having accountant, requires to meet him from time to time.

I am just outside London and anyway I would come and see you.

 

[smo]

Though, I don't understand why having a meal during office hours is not business expense.

Are you serious??

Everyone (within reason) eats lunch, why do you think its a business expense??

Do you see all tesco employees claiming the food they eat at lunch? Its no different if you are a 1 employee business or a 1000 employee business.

 

[gajus]

Are you serious??

Everyone (within reason) eats lunch, why do you think its a business expense??

Do you see all tesco employees claiming the food they eat at lunch? Its no different if you are a 1 employee business or a 1000 employee business.

No, that doesn't make sense. The logic is very simple. I wasn't working, I would have my launch at home, i.e. I could make my own meal, which is far less expensive and better quality than going out. If, however, I want to get the same quality food during my working hours, I need to spend more, therefore, it sounds most logical for me to call it business expense.

 

[David Griffiths]

Logic is irrelevant, and in any event your logic differs from other people's, most importanly the Judge who decided the leading case, Lord Templeman, no less.

For an expense to be deductible from the profits of the trade it has to be "wholly and exclusively" incurred for the purpose of the trade. Leading case: Caillebotte v Quinn 1975. Revenue 1 Taxpayer 0

Eating is a necessity of living, not a cost of working. You could equally argue (and with the same zero chance of success) that the cost of the clothes that you wear to work is a business expense because if you didn't work you could stay in your house or in bed without any. That won't work either. Leading case Mallalieu v Drummond in 1983. Same score.

 

[talkinpeace]

BUT
I have argued and won a case with HMRC on a client who ordered a midnight take away from home after he returned from a trip away.
Pointed out that either HMRC agreed the takeaway (£17) or from then on it would be extra nights in hotels and dinner (£117)

And when I and half my old colleagues were abroad on audit we got to put ALL of our T&S including part of the bar bill through the firms' accounts ....

The current guidance page
http://www.hmrc.gov.uk/incometax/relief-travel.htm
shows that meals away from home are allowable for a director

 

[gajus]

Now wait a second.

[..] that the cost of the clothes that you wear to work is a business expense because if you didn't work you could [..]

You are telling me that directly work clothes is not a business expense? Such as: suit, shinny shoes & whatever else that I wouldn't purchase to wear at home. I mean, this is directly related with my company & my activity as a "sales man".

 

[talkinpeace]

http://www.hmrc.gov.uk/manuals/bimmanual/BIM37910.htm

it was a belter of a case
shame she is such an unpleasant person

 

[David Griffiths]

Now wait a second. You are telling me that directly work clothes is not a business expense? Such as: suit, shinny shoes & whatever else that I wouldn't purchase to wear at home. I mean, this is directly related with my company & my activity as a "sales man".

That is exactly the position. Protective clothing, such as overalls, boots, golves etc aren't a problem, but suits are not deductible, whether you'd wear them at home or not.

And the judge ruled that it wasn't directly related with work my activity as a "sales man" (or in the court case, a barrister. It was directly related to your normal human need for clothing. There was duality of purpose and that was enough to rule it out.

 

[David Griffiths]

BUT
I have argued and won a case with HMRC on a client who ordered a midnight take away from home after he returned from a trip away.
Pointed out that either HMRC agreed the takeaway (£17) or from then on it would be extra nights in hotels and dinner (£117)

Always worth a try, as some inspectors are a soft touch. Perhaps not enough to make it worthwhile given the penalties for getting it wrong. I would find it difficult to believe that somebody would spend £117 on a hotel, which still costs £94 after tax relief just because he is denied £3.40 relief on his takeaway

And when I and half my old colleagues were abroad on audit we got to put ALL of our T&S including part of the bar bill through the firms' accounts ....

The current guidance page
http://www.hmrc.gov.uk/incometax/relief-travel.htm
shows that meals away from home are allowable for a director

Rules for employees are different, and only apply when working away from the normal place of work for a sufficiently long period - the scale allowance is £5 for more than five hours away from base. More for longer absences

 

[smo]

No, that doesn't make sense. The logic is very simple. I wasn't working, I would have my launch at home, i.e. I could make my own meal, which is far less expensive and better quality than going out. If, however, I want to get the same quality food during my working hours, I need to spend more, therefore, it sounds most logical for me to call it business expense.

Thats no logic, make a packed lunch, take a ready meal, buy a harrods picnic basket - doesnt matter how you eat or what you eat its something you would do anywhere so its not allowable. It is not an expense of the business, its an expense of the person.

As for the clothing, again not allowable unless it carries the companies branding such as a logo'd t-shirt or is protective equipment like overalls and boots.

I bet you think you should be able to claim for fuel for going to work too because its a business expense with you having to drive to the office???

 

[gajus]

Thats no logic, make a packed lunch, take a ready meal, buy a harrods picnic basket - doesnt matter how you eat or what you eat its something you would do anywhere so its not allowable. It is not an expense of the business, its an expense of the person.

As for the clothing, again not allowable unless it carries the companies branding such as a logo'd t-shirt or is protective equipment like overalls and boots.

I bet you think you should be able to claim for fuel for going to work too because its a business expense with you having to drive to the office???

Holy smoke! Are you serious? Fuel is not business expense? Now I am a bit lost. Car is business expense, but fuel not? I do own business in another country and I know people who have business in US. Literally all of these expenses: food, clothes, fuel are paid from their business expense. Furthermore, I do recall a conversation with another director in UK who did tell me about paying for fuel as part as business expense.

Anyway, I need to get an accountant to get these things sorted out. I see that I have more questions than I initially thought. Just to clarify, though, by business expense I don't mean any tax relief, I am just talking about paying for this from business account.

 

[smo]

Now read my post again carefully, I said fuel to the OFFICE isnt a business expense, you cant claim fuel to get to and from your permenant place of work.

Travel to clients etc. is claimable within the guidelines and limits set by HMRC.

Oh and a car isnt a business expense unless its a proper company car upon which you get charged BIK. If its merely your own car then you can only claim the fuel element.

 

[Truemanbrown]

That is exactly the position. Protective clothing, such as overalls, boots, golves etc aren't a problem, but suits are not deductible, whether you'd wear them at home or not.

And the judge ruled that it wasn't directly related with work my activity as a "sales man" (or in the court case, a barrister. It was directly related to your normal human need for clothing. There was duality of purpose and that was enough to rule it out.

The newsreader, Sian Williams, tried to claim that all the clothes that she wore on the set of 'Breakfast Time' should be an allowable expense. She lost!

 

[David Griffiths]

The newsreader, Sian Williams, tried to claim that all the clothes that she wore on the set of 'Breakfast Time' should be an allowable expense. She lost!

I'm sure that there have been cases in the past where TV people have agreed a partial allowance for "stage clothing" but I couldn't point to any links

 

[Truemanbrown]

I'm sure that there have been cases in the past where TV people have agreed a partial allowance for "stage clothing" but I couldn't point to any links

I once dealt with a couple of well-known actors (a long time ago). We managed to get some of their make-up and hairdressing expenses through but not their clothing.

 

[Business News]

As a limited company your company can provide meal subsidy or entirley free dining to employees. The HMRC ruling on this is that it is perfectly acceptable so long as everyone in the company receives the same level of subsidy. Being a one person limited company or a 10,000 people limited company doesn't make any difference. So you can get your local restaurant to bring around fine dining every day.

This pearl came out of a tax inspection my company went through when the inspectors queried off site working lunches but said in house lunches are fine, so long as no one in the company is excluded and even if there was only one person in the company.

 

[David Griffiths]

As a limited company your company can provide meal subsidy or entirley free dining to employees. The HMRC ruling on this is that it is perfectly acceptable so long as everyone in the company receives the same level of subsidy. Being a one person limited company or a 10,000 people limited company doesn't make any difference. So you can get your local restaurant to bring around fine dining every day.

This pearl came out of a tax inspection my company went through when the inspectors queried off site working lunches but said in house lunches are fine, so long as no one in the company is excluded and even if there was only one person in the company.

I think that might be a bit optimistic. The ruling applies to meals provided in a canteen, and the HMRC guidance is at pains to point out that the word canteen has its ordinary meaning - i.e. it is not the kitchen table in the director's house!

 

[UKcentric]

OMG is it really true that you cannot buy food through a business account? Unless I am reading this completely wrong (quite likely).

For example the other week I took two clients out to dinner at a local restaurant as part of a bid to win a large amount of business from them.

I paid for the meal (£75) using my business account card. Should I have paid for this using my personal card instead?

 

[David Griffiths]

OMG is it really true that you cannot buy food through a business account? Unless I am reading this completely wrong (quite likely).

For example the other week I took two clients out to dinner at a local restaurant as part of a bid to win a large amount of business from them.

I paid for the meal (£75) using my business account card. Should I have paid for this using my personal card instead?

No, you are OK paying it from the business, and charging it to profit and loss as entertainment. It just means that the company won't get a corporation tax deduction for this expense. It's not illegal for the company to pay it, though. Hope it didn't give you too much indigestion!

 

[Ian J]

Could I get a broader definition of "working away from office", e.g. my office is registered in another city & lately I barely I come there at all.

Though, I don't understand why having a meal during office hours is not business expense.

Allowable expenses are supposed to be wholly in the line of busines and the Inland Revenue take the view that one would have lunch whether in the office or out of it so there is nothing "wholly in the line of business" about it.

I assume that if you are self employed you will be claiming either for the rent of an office or else if working from home a proportion of your household expenses and whichever you are claiming for will be deemed to be your base