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Where Taxpayers and Advisers Meet

Networking or Entertaining - Does it Make a Difference?

HectorsFolly
Posts:5
Joined:Wed Aug 02, 2017 1:30 pm
Networking or Entertaining - Does it Make a Difference?

Postby HectorsFolly » Wed Aug 02, 2017 1:43 pm

Dear Sirs,

I have a client whose directors have several networking commitments, which may be anything from simple meetings to quite lavish affairs, involving meals, booked tables, and the like.

These are hosted events within their professional sphere, and it is unusual to take clients, so I do not think it could count as client entertaining.

But nor would these directors consider themselves to have been entertained even if there were food, drink and, dare I say, entertainment. Staff entertainment would generally be a Christmas party or a day at the races, where the focus of the event or expenditure is on the business' employees. Here, the directors' focus is on raising the profile of their business, and making contacts within the profession and potential referrers of work. In other words, they would not consider themselves to have been entertained as a benefit in kind, but simply to be working after hours.

To me, it looks like networking but my feeling is that HM Inspector would want to disallow the expenditure.

I would be grateful for other people's thoughts.

H

bd6759
Posts:4262
Joined:Sat Feb 01, 2014 3:26 pm

Re: Networking or Entertaining - Does it Make a Difference?

Postby bd6759 » Wed Aug 02, 2017 5:03 pm

What expenditure does the compnay incur, and on whom?

AnthonyR
Posts:322
Joined:Wed Feb 08, 2017 2:33 pm

Re: Networking or Entertaining - Does it Make a Difference?

Postby AnthonyR » Wed Aug 02, 2017 5:22 pm

I think it all depends on the level of expenditure and what the focus is. If it's networking with an incidental supply of a beer and some nibbles then it's probably allowable. If it's a lavish champagne and dinner event with some incidental networking attached then it's more questionable. If clients attend then it's almost certainly entertaining.

The key question is going to be whether this is wholly and exclusively for the purpose of the trade. Are they getting new business from it? If it's genuine networking and results in a significant net profit due to winning clients which return a large multiple of the cost of the networking (or at least should do) then perhaps allow it.

Part of the consideration may also be whether they deal in high end products/people. If a high end IFA goes looking for new clients he's going to need a fancy place full of rich folk, rather than small business networking.
Anthony Rogers LLB CTA TEP
Fusion Partners LLP
anthony@fusionpartners.co.uk


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