How much wine will the tax man let you have?

It’s a familiar scenario…you are away on business, you have gone out for a bite to eat and you have just been given the wine list.  Will the taxman let you have anything?  Under the general income tax law as a director or employee you are taxable on the full amount of “emoluments” received which includes expenses. HOWEVER, there is an exception for expenditure n incurred in the performance of your duties.  In practice this includes the cost of a ‘reasonable level of refreshment (both alcoholic and non-alcoholic)’ and refreshments such as tea, coffee or a soft drink between meals. However the taxman could treat your expense claim as unreasonable if he considered that you choose from an elaborate menu, had wine fine & cigars.  You should consider altering your company’s expenses policy to cover alcoholic drinks taken with a meal.  It should state what you consider to be a reasonable level of alcoholic refreshment when you or your employees are away on business e.g. a ‘pre-dinner drink and half a bottle of wine with a meal’.

 

Staff Christmas Party and other annual functions beware of your limits -
You can spend up to £150 (VAT inclusive) per head tax free on staff functions  – that’s £150 for the tax year (6 April 2007 - 5 April 2008) not for each event! However, if the total amount for the year exceeds £150 for any person then the whole amount of the cost may be taxable – not just the excess (which makes you very unpopular!).

Events which are a mixture of customer and staff entertaining and sales promotion could be tax effective, but it is best to seek advice on this – preferably in advance of the event

Have you got it covered?
Enquiries from the taxman and VATman are time consuming and very costly since it will take time for your advisor / accountant to deal with their questions on your behalf.  Tax Enquiry Fees Insurance should cover all accountancy and specialist fees you incur in responding to an enquiry and fighting any challenge made by the Inland Revenue. Ask your accountant if he operates a scheme

These tips are provided to help trigger ideas on ways to minimise your tax burden, not as a substitute for professional advice. There is no "one-size-fits-all" answer - each taxpayer's situation is different. We strongly encourage you to contact us to determine together how these ideas may affect your unique situation.

For more information please contact John Oakley on 01394 279692 / 01394 287051

 

http://www.beatons.co.uk/">http://www.beatons.co.uk/">www.beatons.co.uk

info@beatons.co.uk

Ipswich

1-3 Elm Street, Ipswich, IP1 1EY

T: 01473 287051

 

Felixstowe

York House, 2-4 York Road, Felixstowe, IP11 7QG

T:  01394 279692