I have been asked to help do the books and tax for a cafe which is probably making a only minimal profit at best, but more likely a small loss. It has a few low paid part time waitresses ,including students, working over the week who are probably given a low cost meal and drink each time they work. We are not talking a big fraud here. The cost of this food is not great per week and is difficult to quantify, but it is certainly not excessive. Can anyone please advise how the HMRC look upon this practice - it must go on I feel certain in each restaurant, cafe etc all over the land -, and 1) therefore what must I do and 2) what usually happens in practice.
All comments and thoughts would be most welcome as usual.
Can you estimate what is the maximum annual earnings of these staff members?
Do any of them approach £8500? You might have few worries apart from reporting this on form P9.
Is there a separate staff canteen or designated staff dining area? If not, try to estimate the employer cost of each meal X number of meals in the year. This may be under £1000 p/a
Have a read of the above and let us know how you go on. Perhaps someone here can advise if these meals can be covered by a HMRC Dispensation.
Always get them to hand in a P45 or fill in a P46, or at least a P38 student form as their tax liability will depend on what other income they have.
It's surprising how the basic things can be missed. Had a new client recently who alleges the previous accountant told him he didn't need those forms providing the employee signed for their wages! Whatever took place, he was left open to the £40K back taxes and penalties which were his lifes savings.
Regards
PS The two tips I've heard are 4-1 and 3-1 home win over Arsenal today.
Had a nagging doubt in my mind since I posted earlier on. In the middle of this link is mention of the 'pro-rata' rule and I can imagine this is highly relevenat to your cafe employing students.
like the question in relation to use of home in an agricultural context that came up the other day, there are specific overrides in relation to the catering industry.
have a read of this guidance on supply of meals to staff in the catering trade :
This isn't actually a scenario that I've hit yet but makes interesting reading,
HTH,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Dear All, Sorry to have not replied fully and in person to you all but I'm up to my eyeballs on other non-tax matters (thank goodness) and have not had time as yet to follow up your helpful comments!. May I just thank you all for your help and kind assistance and I'll follow up the leads as soon as I can. In passing no one earns £8500 and I suppose one can argue at a pinch that they have their free small cheap meals in a separate area (which they probably don't) - come on this is a small cafe and I'd dearly like to know what really happens in practice up and down the country!
Watch this space and please send any other thoughts you may have. What did all you practioners do in practice with the cafe!!!
ps I never cease to be amazed at the kind assistance of this site, so all of you take a bow.
I remember a few years ago (before I re-learned bookkeeping) I did the books manually for a restaurant and carry out place. The owner was told by the tax folk he could supply meals free of charge to his employees but he had to account for any food he ate himself. He then had the strange experience of telling the tax folk he couldn't eat the meals he sold because of a medical condition (he couldn't eat fried food).
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