Small businesses across the UK will soon see HM Revenue & Customs (HMRC) clampdown on corporate away days.
That is according to law firm Pinsent Masons, which said that the department will now ask for tax and National Insurance on the cost of such events.
Joe Quinn, the company’s Director, explained: “If tax inspectors think that there is too much of a fun or social element to a company’s offsite event then they should be treated as though they are a taxable treat for employees.”
Staff Parties and Annual Functions costing less than £150 per head are exempt if open to staff generally but Corporate Hospitality is another minefield
Her Majesty’s Revenue and Customs (HMRC) make it quite clear that members of staff, such as sales representatives, who would be expected to attend corporate hospitality events in order to entertain clients as part of their role within the company, would be exempt from any potential charge on benefits in kind. Other members of staff, who were present purely as a perk of the job, would be deemed as being in receipt of a benefit and therefore would be liable for a charge. Visitors, not employed by the hosting company would be exempt. The company paying for the corporate hospitality would also be able to treat the expenditure as entertaining clients, for which they could claim tax relief.
2 thoughts on “Did you have fun on your corporate day out? you could be in for a tax bill”
This always reminds me of the term “3 line whip”. I used to be forced to attend “fun” company dinners or events which I always considered to be a chore. I would have been extremely unhappy if HMRC tried to make them a BIK, and given the choice I would not attend, but had to because it was expected. We always called it 3 line whip – and the only way it was bearable was to try and have some fun. Especially when these occassions where during my personal time. It may be a female thing, but given the choice I’d rather be a home, so the HMRC better “get a life” in the same way the rest of us try to.
Whether you enjoy the event or not is not relevant as we dont always enjoy all things we feel we should attend. The approach set out is not new at all. It may be that HMRC are focusing more on this area at present but the principle has always been there – an event which is purely a social or reward event (and which is not an annual event in the nature of a Christmas party open to all staff) will be taxable on the employee although the employer may choose to bear the tax cost on their behalf – thus a thankyou for good performance, a day at the races, a team meal…those sorts of things are taxable. At the other end of the spectrum a structured annual awayday perhaps to get the team together to discuss past years performance and next years business plan should not be taxable provided it can be demonstrated that there is a significant business element. Thus a work session in the first two-thirds of a day followed by a team buiding event SHOULD be ok. Very important to structure properly.