Peter Savage looks at corporate entertainment


TV-Bay Magazine
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by Peter Savage
Issue 80 - August 2013
Two weeks ago I was lucky to be invited to a golf day with a broadcast dealer whose business is, co-incidentally, a supporter of TV-Bay. It was a fantastic day and everyone really enjoyed it but it raised several queries that I thought worthy of addressing in an article.

Youre partying for the taxman

The first query was tax-related: how does the taxman treat entertainment? Is it, for example, tax deductible?

Unfortunately, the days of tax-free corporate entertaining are long gone: the cost of such entertaining can be offset against profit and loss but cannot be offset against the companys tax bill. Nor can businesses claim back the VAT on this type of expense.

Its also important to note that you must demonstrate that the majority of attendees were customers, or people you do business with; otherwise it will be classed as a personal liability. It is, therefore, good practice to keep a detailed note of who attends your functions as, if your company experiences a tax inspection and you cannot prove the event was predominantly for customers, it could be classed as personal income.

Dont spend, spend, spend


Which brings me to my second question: is there a limit to the amount you can spend, as an allowable business expense, on entertaining your own staff? Yes, and it isnt very much. Here are the rules: - The total cost must not exceed £150 a person, a year.
- That £150 limit includes VAT, transport and accommodation.
- The £150 limit is not an allowance; if the cost exceeds £150 the whole amount is taxable.
- The event must be primarily for entertaining staff.
- The event must be open to all staff (if you hold events for separate branches or departments, it must be for all staff relevant to the branch/department).
- The event must not be for directors only.
- The cost of the whole event is an allowable expense for your business (subject to the rules, above).
- You can claim back VAT but this might be restricted if the event was also attended by customers.

So if the dealer who organised the golf day had taken his staff out for the evening after entertaining his clients, the business could easily have used up a huge amount of its allowable staff expenses.
When is entertaining a bribe?

Once you have passed the test proving your entertainment was a viable business expense, there are other aspects to be accounted for in todays business climate. Question three: could the entertainment be construed as a bribe? The Bribery and Corruption Act came into effect in 2011 and Ive discovered that most people Ive talked to dont understand the seriousness of the act or how easy it is to break its guidelines.

For instance, the maximum prison sentence for being convicted of bribery is 10 years. Yup, that says 10 years.

It is also a requirement that companies should have clear anti-corruption and bribery policies that demonstrate that costs are, as required by the act, proportionate and reasonable. Best practice for our industry is, in my view, for corporate entertainment costs not to exceed £250.00 a person. Companies should also have policies on receiving and giving gifts and keep clear, documented records of them.

Impact on events

It is interesting the difference this has made on certain events. When I was with one of the main sponsors (a major corporate) of the recent Lions tour, I asked him about his companys sponsorship beyond their name appearing, quite small, on the training kit. I assumed it included tickets to take customers to matches. Not possible, he said, as the cost of flights (in economy) to Australia would exceed the individual allowance. Entertainment was limited to three corporate golf days in the UK where guests had access to players before they went on tour. Long gone, again, are the days when a well-known IT storage manufacturer flew its top 20 UK customers first class to watch England in the World Cup final.

A moral dilemma and a challenge

Having dealt with business entertainment, staff entertainment, and bribery and corruption all on the back of an excellent dealer golf day I came up with my own moral dilemma, and that was of sexism.

Most corporate days in our industry are tailor-made for men. At golf and track days women rarely take part and, if they do, are often confined to being caddie car drivers or drinks providers, pandering to the needs of testosterone-fuelled men driving cars at their limits. Dont get me wrong; this is not a criticism. I would simply like to even the balance.

There is a time and place for golf days and spending quality time with a customer whilst participating in a sport where the best can have a competitive game with the worst (and that is not a cheap jibe at the TV-BAY editors first appearance at a golf day!). But there must be some form of corporate entertainment that isnt another male lite day. The two broadcast corporate events are sigh golf days and if more than one woman were to compete I would eat my hat.

So female readers of TV-Bay unite and give me examples of unisex corporate events with wide appeal and Ill commit to holding one within the next year.


Tags: iss080 | azule finance | rules | regulations | corporate entertainment | bribery | act | laws | [author]
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