Company events such as work parties, company present­a­tions, an­niversary cel­eb­ra­tions, and company lunches all have this one thing in common: They need to be well organised. In addition to schedul­ing, sending out in­vit­a­tions, designing the programme, and procuring catering for the par­ti­cipants all play an important role. Neither employees nor business as­so­ci­ates should leave feeling hungry or un­sat­is­fied with the menu choices.

But in the endeavour to offer all employees and guests a wide selection of del­ic­acies, it’s important to not lose sight of the cost factor. For this, it helps to make sure that all meal and en­ter­tain­ment expenses are entered correctly into your books and credited correctly in your tax returns. This guide will advise you on how to proceed and what to look out for.

The first step: An ap­pro­pri­ate ac­count­ing system

To be able to properly organise your business events, you first need a proper ac­count­ing system. This is a pre­requis­ite for the creation of a detailed and in­di­vidu­al­ised account plan that includes all of your company accounts. It’s an integral part of the double-entry book­keep­ing system.

Note

The ac­count­ing system is only the found­a­tion of your book­keep­ing plan. In order to customise it, you still need the necessary know-how. As the software doesn’t provide a full support system, it may be necessary to hire a third-party expert ac­count­ant to fully utilise the ac­count­ing software.

How to properly record business en­ter­tain­ment expenses

Before you start recording your business en­ter­tain­ment expenses and their cor­res­pond­ing tax de­duc­tions, you must be aware that all costs have to reported on the form P11D in order to be eligible. These expenses have to meet the guidelines presented by the HMRC and be valid under one of the cat­egor­ies listed as expenses and benefits to be included in form P11D. Recording expenses ac­cur­ately and in full will help determine which expenses are included and where your tax de­duc­tions apply.

Where to display expenses on your tax return

Depending on which expenses you’re trying to deduct or what kind of business you run, business en­ter­tain­ment expenses will be listed in a number of places. The A to Z of expenses and benefits from the HMRC gives a com­pre­hens­ive overview, but smaller subpages such as the social functions and parties list, meals for employees guidelines, and employer expenses provide more specified help. Complete filing of the P11D form sim­pli­fies the process of recording your en­ter­tain­ment expenses, as this form covers everything related to expense payments and benefits. The HMRC supplies a complete P11D guide, updated every year, to help employers through the process. The subform P11D(b) is also used for reporting Class 1A National Insurance con­tri­bu­tions for expenses and benefits paid to employees. This only needs to be filled out once, and covers all of the employees listed in your employer reference.

Note

Re­gard­less of the source of the expense, all ex­pendit­ures need to be included in the ap­pro­pri­ate doc­u­ment­a­tion.

Please note the legal dis­claim­er relating to this article.

Reviewer

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