PTX - "general round sum allowance" - just need to check my understanding on ques

topcat

Hi,

Trying to do this question but just wanted to know is the 35% of the general allowance not classed as an "allowable" expense because it is coming from a "general" expense allowance? and this then falls into the category of "general round sum allowance"?












thank you

MarieNoelle

Hi topcat
you are correct. Entertaining expenses are not allowable here because the employee received as an advance a general allowance to cover the costs.

If the employee had claimed the entertaining expenses and then had been reimbursed by the employer, the company would have identified them as entertainment and disallowed them in the Corporation tax computations. In this case these expenses wouldn't have given rise to a taxable benefit for Egbert.
Hope this makes sense?

topcat

MarieNoelle wrote: »

Hi topcat
you are correct. Entertaining expenses are not allowable here because the employee received as an advance a general allowance to cover the costs.

If the employee had claimed the entertaining expenses and then had been reimbursed by the employer, the company would have identified them as entertainment and disallowed them in the Corporation tax computations. In this case these expenses wouldn't have given rise to a taxable benefit for Egbert.
Hope this makes sense?

Hi Marie

Thanks so much for clarifying it has helped me to make sense of it :001_smile: