Food bill paid for Clients

Hayley Hong

Hi All

A new MIP starter here.

Firstly, Just want to take this opportunity to say thank you for those who help the others, I personally have learnt a lot by reading through the posts in the past months. you guys are my heroes. It encouraged me to be a MIP

I have a new client whose business is to advise her clients on matching clothes, matching colors, go cloth shopping with her clients to advise them address better, etc. 1) when she does training course for her clients at her house, she buys food for the training session from super market, I am sure this food is allowed expense for a Self Employed business. 2)But, When she goes cloth shopping to advises her client to choose cloth in a shopping centre, she also pays for restrauant bill for both her & her client, I am not sure if this food bill is allowable expenase.

Any advise would be much apprieciated. thanks in advance

Hayley Hong

Hayley Hong

groundy

This is a business expense and would be classed as Entertainment, however no VAT can be reclaimed and it is not an allowable expense for tax purposes and would need to be added back on your tax comp.

coojee

groundy wrote: »

This is a business expense and would be classed as Entertainment, however no VAT can be reclaimed and it is not an allowable expense for tax purposes and would need to be added back on your tax comp.

Is it still classed as entertainment if it's part of the fee charged to the client? I imagine that the client pays a flat rate for the day which includes a meal.

Hayley Hong

Thank you. Groundy

Hayley Hong

Hi Coojee

This is where I am confused about: clients pays £150 for a "day trip". and the food bill is between from £15 to £50.

Monsoon

coojee wrote: »

Is it still classed as entertainment if it's part of the fee charged to the client? I imagine that the client pays a flat rate for the day which includes a meal.

Agree, if the service is sold as "a day's consultancy plus meal" then it's cost of sales, and thus deductible. Surely?

Hayley Hong

Hi Monsoon

My gut feeling is that it is allowed, thank you

Monsoon

Hayley Hong wrote: »

Hi Monsoon

My gut feeling is that it is allowed, thank you

Make sure she sells it as part of the package, as opposed to it being 'complimentary entertaining' in which case it would not be allowable. If she advertises the package as including food, then I would class it as cost of sales.

By the way, if she is self employed, subsistence is disallowable, so she can claim cost of sales for the client but her own food isn't wholly and necessarily for business (duality - she needs it to live!) so she likely can't claim her own lunch. There are a few instances where a self employed person can claim food away from home so worth looking up in the HMRC manuals.

http://www.hmrc.gov.uk/manuals/bimmanual/index.htm

groundy

Sorry misunderstood that part. Yes agree if it is part of the package then yes cost of sales, however as mentioned it must be clear in any documentation that it is part of the package. I would say a days shopping experience should not presume to include a meal and therefore it should be specified that the meal is part of the experience.