Member Article

Top tax tips for corporate travel, training and entertainment

For businesses looking to arrange client entertainment, staff entertainment and training, or conference events, the rules on taxation can be somewhat unclear, especially when events are held overseas. With Christmas party season nearly upon us, and in order to save headaches and to help avoid an unexpected tax bill, the team at five-star luxury ski resort, Les Rives d’Argentière in Chamonix, Mont-Blanc, has teamed up with UK tax experts, Perrys Chartered Accountants, to put together this helpful guidance on the regulations.

**Client Entertainment ** Due to a global rise in anti-bribery legislation across industries, there is a definite decline in lavish client entertainment. That said, there is still a need for companies to show their appreciation for highly valued or long-standing clients.

Businesses should be aware, however, that they will generally be unable to obtain tax relief from HMRC on these kinds of expenses. There are certain exceptions, such as the gifting of small branded products, which is effectively seen as advertising, but these are very specific and restrictive.

Staff Entertainment Despite the fact that sterling took a hit against the euro following Brexit, Les Rives d’Argentière has noticed an increase in ‘in-house’ incentive travel and performance rewards for staff.

Unlike entertaining clients, companies looking to provide internal entertainment for their staff, such as summer barbeques or Christmas parties, will find that these are generally tax deductible expenses. However, many businesses are unaware that there could be personal tax implications for their staff if they fail to adhere to the regulations.

If a party or function fails to meet the following conditions, then it will be considered as a taxable benefit in kind on the staff and must be included on their P11d:

• The cost of the function or party, including VAT (whether or not this can be reclaimed) must be less than £150 per head – in addition to venue hire and bar bill, this also includes the cost of providing transport or overnight accommodation

• This £150 limit is an exemption and not an allowance, which means if the overall cost of the party amounts to £151 per head, the whole amount will be taxable on the staff attending as a benefit in kind (not simply the £1 excess)

• The limit applies to the entire tax year, not to individual events. Therefore, employers need to ensure the combined cost of all events is less than £150 per head

• The function or party must be open to all employees or all of those in a particular area, so smaller team dinners will not be tax deductible

• The exemption is only available for annual events, such as a Christmas party, and ad hoc staff meals throughout the year are unlikely to qualify for exemption The good news is that the £150 limit can also include spouses/partners if they attend the event, therefore the overall limit could effectively be doubled. If the function fails to meet the above conditions, and is therefore taxable, it is possible for an employer to enter into a PAYE Settlement Agreement (PSA) with HMRC to settle the tax on behalf of their employees.

Meals or trips away provided to staff as a reward for good performance will also be a taxable benefit for the employee.

Conferences Conferences and staff training programmes run by UK businesses are another area of growth for the five-star luxury ski resort in Chamonix, Mont-Blanc, but the owners still see some confusion from clients as to just what is and isn’t allowed.

It may seem self-evident that conferences are tax deductible expenses as they fall under employee ‘training’, which are incurred for the purposes of the trade, but in some cases they can be identified as a staff benefit, which means the employer has to ensure they meet the conditions outlined above. Once again, the bigger issue here is whether any costs are taxable on the staff personally.

• If the conference takes place overseas it will not necessarily change the tax treatment, but it is likely to attract greater scrutiny from HMRC so it is even more important to be clear on the regulations

• If the trip is exclusively for work, and personal benefits are incidental, then it is unlikely there will be any personal tax implications on the staff. However, HMRC may require a full itinerary for the entirety of the trip to substantiate such a claim

• The employee may also be required to demonstrate that their attendance at the conference was necessary for the performance of their duties, as such it must be relevant to the role performed by that particular employee

• If the trip is primarily business focused, but includes a subsequent ‘holiday’, then any additional costs incurred would be taxable on the staff

• Unlike staff entertainment, if spouses or partners attend a conference that has been paid for by the business, any additional costs incurred by their attendance would be taxable on the staff

Martin Bromley, general manager at Les Rives d’Argentière, said, “Since we are seeing an increase in these types of corporate bookings, we felt it was important to make people aware of some of the tax implications they might not otherwise know about.

“These tips are intended as a first point of reference for businesses looking to clarify the UK tax rules in relation to entertainment, travel and training. The tax rules for any business are complex, therefore it is always advisable to take detailed specialist advice from accountants such as Perrys in cases of doubt.”

This was posted in Bdaily's Members' News section by Gemma Hook .