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Gifts to customer and deductibility

MarieNoelleMarieNoelle Trusted RegularHampshire/Surrey borderModerator, MAAT, AAT Licensed Accountant Posts: 1,432
My sole trader client is an event organiser. She organised a wedding (fees amounting to £70,000 +) and bought the client a wedding gift for £300.

Just reading BIM45065 and I wonder if there is any scope of treating this as cost of sale?
https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim45065
Your thoughts are appreciated,
MN

Comments

  • BertieBertie West Midlands Registered Posts: 376
    edited May 2017
    Hey,

    My first question would be - what is the gift?

    Personally I'd say disallow.

    Unless s47 is in point.
  • MarieNoelleMarieNoelle Trusted Regular Hampshire/Surrey borderModerator, MAAT, AAT Licensed Accountant Posts: 1,432
    Thanks @Bertie

    I refer specifically to the section above of the BIM as it gives the example of a bunch of flowers given with a car. It could apply to a gift by an estate agent to the buyer of a new home. Similarly could we argue that it is customary for a wedding organiser to offer a present to the clients? And in this case does it matter what the gift is?

    My instinct is also to disallow but I need to satisfy myself (and my client) that I haven't missed anything!
  • BertieBertie West Midlands Registered Posts: 376
    edited May 2017
    Each time the planner arranges a wedding will there be a gift for the happy couple?

    If the final cost of £70,000 includes the price of the gift I'd say it was part of the sale. If it was bought outside of the £70,000 personally I'd say that that may create an issue.

    So for me - for it to be allowable the customer would need to be unknowingly buying their own gift for it to be allowable.

    It is an interesting one that I think maybe will come down to the timing and make-up of the invoice.

    I hope my opinion makes sense, It does in my head at least :)











    MarieNoelle
  • TreadStoneTreadStone Feels At Home AAT Licensed Accountant Posts: 280
    When this type of thing crops up, I always ask "what has been received in exchange for the gift ?"

    The answer is usually "nowt" so should be disallowed. That's my accountants head on.

    Having said that, I can see why it could be argued to be allowable so maybe an entry into "advertising" ?...... =)
    MarieNoelle
  • MarieNoelleMarieNoelle Trusted Regular Hampshire/Surrey borderModerator, MAAT, AAT Licensed Accountant Posts: 1,432

    No contractual entitlement to a wedding gift.
    The present was actually bought after the wedding and after the invoice for the organiser's fees so it would be hard to argue it was part of the sale.
    Thanks all for your comments.
    Bertie
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