Employee entertaining

[simplytax]

If shareholder director and 2 of the employees who hold small number of shares go overseas on a fishing trip where part leisure trip but also discuss company business what is tax treatment ?

If not open to all employees and not covered by £150 per head then presumably total cost of trip is a BIK on employees and if company does not want employees to suffer BIK it will need gross up first. Can it be dealt with by PSA ?

BIK to include flights, accommodation and meals etc ie total VAT inclusive amount.

Presumably cannot simply disallow for CT as shareholder costs if they are also employees ?

If BIKs then company should get CT deduction and VAT recoverable ?

[Incredulum]

It can be dealt with on PSA if HMRC agree - TBH I've no idea what the implication is if they don't agree...

You cannot just simply disallow it, it is not acceptable to deny CT relief in lieu of saving a PSA charge.

At some point I guess there may be an argument that the expenditure is taxable on the employee and not deductible for the company as it is not "wholly and exclusively".

Remember the BIK is calculated on the amount grossed up for VAT.

[simplytax]

I don't think there should be a problem with CT deduction if been treated as a BIK as effectively it is part of incentive/remuneration package and as such W&E test satisfied.

http://www.hmrc.gov.uk/manuals/bimmanual/BIM45033.htm

http://www.legislation.gov.uk/ukpga/2009/4/section/1299

I assume that there is no escaping the BIK however and the employment consequence will take precedence over any "distribution" where the employees are also participators in a close company.

However how is this distinguished from team building away days for certain employee groups or departments in a company ? Is there any guidance on how HMRC treat company expenditure on such trips ? Is a paintball/activity day any different from a fishing trip if the overall aim is of team bonding in which case is it a BIK?