First of all, you have all been great in answeringmy silly questionsand I appreciate all your help. But, here I am again
Is the dinner with a customer or journalist considered as entertainment? My director does not allow me to put it under entertainment; he says that I should put it under subsistence
Our company sells some products that a sales person sometimes buys from our customers. He calls this process a tasting with client. Should receipts go under direct cost or overheads?
Its not direct because it doesn't have a direct link to the product (like wood in a chest of drawers or the labourers wages). I would creat 'indirect costs' and put this under that.
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Please correct me if I'm wrong... I am only human sucking up knowledge... Sometimes bits leak out!
If food & drink is provided to someone who is not an employee, it's generally considered entertainment by HMRC.
So, if the director is just trying to avoid the CT and VAT issues of "entertainment", then you might need to point out that merely coding it elsewhere, won't change the tax implications, if it really is entertainment :)
Can I use a code in a miscellaneous expenses range such as 6901 - Tasting with clients?
The dinner with the customers my direcotr calls "business meeting" and i was thinking maybe I should create a special code for it i.e. 7407? I do not want to put it under subsistence but if i put it under entertainment - i will have problems with the director.... We argue quite a lot, he thinks that if I am student i do not understand anything about business, but ive been studying accounting and taxation and from my lectures and seminars i know some things as well but to convince him is so difficult...
What's the business? I'm just thinking if it's a cake making business and his tasting sessions are wedding cake customers sampling then I wouldn't consider it entertainment.
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Please correct me if I'm wrong... I am only human sucking up knowledge... Sometimes bits leak out!
Just wondering why you would want to work for a company that constantly undermines you? If he can do a better job, why doesn't he do the books?
As you are an employed (right?) bookkeeper, I think your suggestion of a separate code to placate the director is the best option. [Do make sure you cover yourself. You don't want the consequences of a 'manipulation of the accounts' on your head.] If the company has an external accountant, he/she is hopefully independent enough to decide where nominal code - Tasting with clients - should end up.
Put it under 'tastings' and make sure the person who does the company tax return knows that it's entertaining. Unless he spends thousands, he won't know the difference :)
To NikkiJ. Yes it is a cake business. So i think I should create a nominal code such as tasting with customer as Nick advised but I do not think that it is a part of entertainment. I consider it as part of business expenses and I will put it under miscellaneous expenses in sage nominal code 6901.....
To Phoenix. Maybe it sounds a bit silly but I like the place and people I work with. The director is not bad just his point of view regarding taxation is .... strange :) As i am a student it is not easy to fin a job that would suit my timetable so i am thankful for the opportunity to gain work experience whilst I am studying. I will put the director's meetings with clients under a separate nominal code. Does anyone know if 7407 in sage would be correct or should I choose a different range?
And one more question........When the bill in a coffee shop or restaurant is paid where does the service charge go? For instance, if the director had lunch in another city ("off site") that is considered as subsistence. Is 12.5 % service charge a part of subsistence or drawings? And what is VAT rate T1 or T9?
I'm not sure if it's quite that straightforward. If the customer gives a tip of their own free will then it's outside the scope of vat. However if the restaurant adds a compulsory service charge then that is vatable,
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Tony
Responses are intended as outline only. Formal advice should be sort from your Institutes Technical Department or a suitably qualified Accountant.
That is a very good point Tony. Thank you for your thought.
One question, how do you know if is free will or compulsory service charge as I just receive the box with till receipts from the restaurants with the service charge on it. My client is travelling a lot and has a lot of meetings therefore I do get a lot of restaurant bills.
Laura. Usually when service charge is compulsory the percentage is shown on the receipt, i.e. service charge @11%, if it is given of free will the percentage is not stated only the amount given. Not sure if I am right but that's what Ive noticed from my receipts :)
Thank you Tony. I was thinking that it should be classified differently for VAT purpose, now I know exactly. Thank you very much!!!!
