I asked as there was a vague possibility that this might have been argued as the annual staff entertainment instead of a Christmas party.... And that's an arguement on a very thin thread that HMRC are likely to run a steam train through.
The maximum would have been £150 per employee or the whole lot is taxable. So, even had there been 5 employee's that's only £750 and the director has spent £1860.04.
Of course, the £150 is for a single event anyway where this is a season ticket deboting multiple events.
Also, a statement in your answer that the director is not an employee of the company. I would get that confirmed by the accountant as whilst the director may not consider themselves an employee if he is controlling the day to day workings of the company statute may disagree with his perceived employment status.
Anyway, back to being constructive.
The director has made a mistake but it's not the end of the world. If they persist in this being staff entertainment then it's a BIK on the employee's and not an allowable expense for tax purposes of the company.
Any benefit that the director derives from this could either be treated as a BIK or take to the DLA, either way it's not a legitimate expense of the company.
VAT is not reclaimable on this non business related expenditure so you are looking at the full figure being used in your calculations rather than the VAT exclusive figure.
At the end of the day it does seem quite obvious that this expenditure was something that the director wanted and was looking for the tax system to partially fund it.
Any staff good will is purely incidental to that and will be completely lost when the staff realise that this is to be treated as a benefit... Unless the director sorts out a dispensation to take on the employee's additional tax liabilities as a result of his actions.
Its late at night and I've been up since 4:30 so sure that I've missed something that I'll pick up in the morning.
Hope that helps for now,
Shaun.
p.s. when I started the reply there was only the Arsenal FC comment. Appologies for seeming to ignore your reply Jeremy. Such was not my intent.
-- Edited by Shamus on Monday 17th of September 2012 11:58:55 PM
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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.
A client has puchased a season ticket for a premier league club for themselves using cash from their business - should this be allocated to DLA - or is such an expense justifiable?
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.
I actually agree with Amanda - I cannot find a justifiable 'business' reason for this, apart from pure enjoyment. However, some may class this as team 'bonding' etc.
As it is a small company (5 employees), and if it can be proven that the tickets are available for use by all employees - can this then be acceptable as an 'staff entertainment'?
I would argue they may be available to all employers but what is 3 out of the 5 hated football and had no interest what so ever to go to a game, what would it be classed as then.
I think Shaun needs to put in an appearance on this one to be honest. I wouldn't like to say and if it was me I would be asking for their accountants advice.
Its still a no from me but I'm in the middle of something at the moment so will give the longer answer later.
In short though the answer is in the wholly and exclusively for the purpose of the business test.
Its not, it's something the director wants and is just looking for some justification for what he wants.
I'll give a better answer later but for now just enough to say that it's going to be a no.
Not that it makes a lot of difference but the original question stated that the season ticket was purchased for themselves, not for all employees and that was what I answered but even if it were available to all unlike staff parties to generate goodwill it's not legitimate expenditure of company funds.
As a matter of interest how much is the ticket and how many staff are there?
kind regards,
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.
Still a no from me, he just wants to put them through the business as they are so expensive! What team are they for?? Is it Man U at that price!!!!!!!!!
if they are only shareholder then you could consider putting it through as entertainment, certainly dont claim the vat back and add back on tax comp as not wholly and exclusively for business purposes.
if there are other shareholders, sure they wont be happy with this as distributable profits will be reduced... so DLA all the way
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