meals with clients

H

h20

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Sometimes I have meals/drinks with clients, and would like to know if I can write these off as business expenses.

Would I ever have to prove to the Revenue that these meals were with clients and not with friends, and how would I do this?
 
If I recall correctly you can write off expenses incurred by paying for a client's business meal but not your own! I guess that you are expected to just keep receipts. There's not really much you can do about proving who you ate with. Basically Revenue assume that you will file accurate/honest returns. If in doubt ask your accountant for advice. If you don't have one then you should probably get one.
 
I dont think you can claim them against CT, even though they are a legitimate business expense.
 
ClubMan said:
If I recall correctly you can write off expenses incurred by paying for a client's business meal but not your own! I guess that you are expected to just keep receipts. There's not really much you can do about proving who you ate with. Basically Revenue assume that you will file accurate/honest returns. If in doubt ask your accountant for advice. If you don't have one then you should probably get one.
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Well, I actually do my own accounts and am doing a good job so far. Do you know where I can get a list online published by Revenue listing everything that can be qualified as business expenditure?
 
There is no such list, as the circumstances of every business are different. What expenses can and cannot be claimed depends as much on context as anything else. Unless you have a reasonable understanding of the theory behind the various business tax rules, then you are probably taking a big risk in doing your own accounts and returns without professional assistance.
 
ubiquitous said:
There is no such list, as the circumstances of every business are different.
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So, how does an acountant actually judge what is a business expense or not?
Is there some book that gives advice on this? I'm eager to learn.
 
They use their experience and knowledge of the relevant rules (e.g. TCAs, Tax Briefings, precedent etc.) to give their clients informed advice I suppose?
 
h20 said:
So, how does an accountant actually judge what is a business expense or not?
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Through a combination of experience and study of technical material for their exams.
h20 said:
Is there some book that gives advice on this? I'm eager to learn.
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There are plenty of books out there, some (such as Alan Moore's Tax Magic series) aimed at the amateur rather than the professional user, but it is difficult to imagine that you would get the same insight from reading one of these books as a professional accumulates from intensive study and completing exams.
 
Oh well. I'll get a book and seen that I can't even find an accountant specialised in my area/particular situation, I'll continue being my own accountant. If the revenue have questions afterwards, I'll just have to deal with the consequences.

I can't believe there is no actual legislation out there for this kind of stuff.
 
There are a few existing threads that might be of interest to you. For example this one. And maybe some more (Google search works better than the AAM vBulletin search in my opinion). But these are not substitute for professional advice.
 
ClubMan said:
There are a few existing threads that might be of interest to you. For example this one. And maybe some more (Google search works better than the AAM vBulletin search in my opinion). But these are not substitute for professional advice.
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Well, I'm having difficulty in finding an accountant who is familiar with self-employed who are familiar with european legislation, ie not just people based exclusively in ireland... I live half the year in another country and am registered in Ireland, but I need an accountant who understands this kind of set-up. Any recommendations are most welcome. I probably just need a couple of consultations to get things straight, as I'm q quick learner and like the independence of doing things myself. However, I don't want to make a mess of things either and be liable fo penalties due to my ignorance.
 
Clubman had it the wrong way around.

You cannot write off any "business entertainment" expenses for income tax or corporation tax purposes (s840).

Business Entertainment is any hospitality or gifts to a person who is not a member of staff and it includes the cost of your own meal when having dinner with clients. In addition, VAT cannot be reclaimed on such expenditure.
 
Ultimately, the test comes down to whether the expense was "wholly and exclusively" incurred for the purposes of the trade or profession. This "wholly and exclusively" test is one of the benchmarks of tax law. If the expenditure passes this test, then it is deductible.

Remember, you eat to live, not to do business. By it's nature therefore eating is not exclusively for the purposes of the business.
 
Graham_07 said:
Ultimately, the test comes down to whether the expense was "wholly and exclusively" incurred for the purposes of the trade or profession. This "wholly and exclusively" test is one of the benchmarks of tax law. If the expenditure passes this test, then it is deductible.

Remember, you eat to live, not to do business. By it's nature therefore eating is not exclusively for the purposes of the business.
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Not sure about this wholly and sxclusive law, but the Revenue site states that no business entertainment costs can be deducted.


What expenses can I claim for?
You can claim for any business expenses which you have incurred in order to earn your profits. These expenses are normally referred to as revenue expenditure.

Revenue expenditure is your day to day running costs and covers such items as:
  • Purchase of goods for resale
  • Wages, rent, rates, repairs, lighting and heating etc.
  • Running costs of vehicles or machinery used in the business
  • Accountancy fees
  • Interest paid on any monies borrowed to finance business expenses/items
  • Lease payments on vehicles or machinery used in the business
If you are registered for VAT the expenses you claim should be exclusive of VAT.
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What expenses can’t I claim for?
The general rule is that you cannot claim for any private expenses i.e.
  • Any expense, not wholly and exclusively paid for the purposes of the trade or profession
  • Any private or domestic expenditure e.g. your own wages, food, clothing (except protective clothing), income tax etc.
  • Business entertainment expenditure i.e. the provision of accommodation, food, drink or any other form of hospitality.
You cannot deduct capital expenditure in calculating your taxable profits, however you can claim what are known as capital allowances on certain expenditure.
 
In my experience companies are quite canny about this.
For example, when I worked for an accountancy firm we had a golf day every year for clients. Naturally some of the staff played that day also, had a nice meal and a feed of pints.
As some posters have pointed out, technically this is not a legitimate business expense. However the whole day was organised by an event management company who just invoiced the firm for their services (i.e. running the day) This comes out of the marketing budget and is a legitimate business expense.
In theory your own meal is not allowable...reality, in my experience, is very different. Revenue are not interested whether you had a fillet steak the six times you were out with clients last year. Just be honest and only include things that do pertain to your business and you won't go far wrong.
 
KalEl said:
In my experience companies are quite canny about this.
For example, when I worked for an accountancy firm we had a golf day every year for clients. Naturally some of the staff played that day also, had a nice meal and a feed of pints.
As some posters have pointed out, technically this is not a legitimate business expense. However the whole day was organised by an event management company who just invoiced the firm for their services (i.e. running the day) This comes out of the marketing budget and is a legitimate business expense.
In theory your own meal is not allowable...reality, in my experience, is very different. Revenue are not interested whether you had a fillet steak the six times you were out with clients last year. Just be honest and only include things that do pertain to your business and you won't go far wrong.
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Yes, fair enough. But you are talking about a limited company here. I'm self-employed. I don't have any employees to entertain.
 
KalEl said:
In my experience companies are quite canny about this.
For example, when I worked for an accountancy firm we had a golf day every year for clients. Naturally some of the staff played that day also, had a nice meal and a feed of pints.
As some posters have pointed out, technically this is not a legitimate business expense. However the whole day was organised by an event management company who just invoiced the firm for their services (i.e. running the day) This comes out of the marketing budget and is a legitimate business expense.
In theory your own meal is not allowable...reality, in my experience, is very different. Revenue are not interested whether you had a fillet steak the six times you were out with clients last year. Just be honest and only include things that do pertain to your business and you won't go far wrong.
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Entertaining clients is not tax deductable, entertaining staff is a tax deductable expense.
 
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