Corporate entertainment

[Dave2002]

What's the point of corporate entertainment? Do firms offering this get a tax break? If so, why?

Wimbledon, Formula 1, Cricket, ROH, Glyndebourne, Henley etc. Maybe the chairmen of companies or owners of such companies as indulge really do have a passion for whatever event it is they are "supporting", but maybe that's not always the case. I've heard of people going to Formula 1 who never saw the race, and missed the podium bit at the end.

[Nick Armstrong]

The main point is for firms to show their clients and contacts a good time, either by way of thanks for business or in order to "schmooze" for future business, and have an opportunity to "network" with them in an enjoyable and apparently "exclusive" setting. Not sure about any tax treatment of such activities.

[Dave2002]

The main point is for firms to show their clients and contacts a good time, either by way of thanks for business or in order to "schmooze" for future business, and have an opportunity to "network" with them in an enjoyable and apparently "exclusive" setting. Not sure about any tax treatment of such activities.

Is it effective, then? There seems to be a heck of a lot of it about.

[Serial_Apologist]

Our union organised a 3-day school on the Health & Safety at Work Act when it was first introduced. On asking the company for premises in which to conduct the school, the union was offered not just the company college, but the directors' canteen, along with 3-course freebie menu, with pre-meal aperatif, as much wine as desired, free ciggies and panatellas. "Fellow" shop stewards were seen stuffing every available pocket with fags and mini cigars. Horrified at such greed, I decided to boycott the following two days, and instead went to the nearest chippy, a mile up the road. On returning for the afternoon session, asked by the branch chairman why I had decided to do this, I explained that the membership who had elected us would have been outraged to have known about such a jolly taking place, and that I wanted to be no part of it. I then heard the area secretary, who had been standing a short distance from us, pointedly facing the other way, say, "Looks like we've now got another of those Trots on our hands, Clive".

[mangerton]

The main point is for firms to show their clients and contacts a good time, either by way of thanks for business or in order to "schmooze" for future business, and have an opportunity to "network" with them in an enjoyable and apparently "exclusive" setting. Not sure about any tax treatment of such activities.

Yes, that is the way of it, and it's been going on for years. The firms offering the hospitality can deduct the cost from their profits, so therefore corporation tax is avoided.

This reminded me of this which hit the headlines in a big way all those years ago. It featured the beautifully, and some might say, aptly named Rotary Tools and Ms Anna Grunt.

I knew one of the men mentioned in that report rather well, but I'd better not say who!

[Rolmill]

The firms offering the hospitality can deduct the cost from their profits, so therefore corporation tax is avoided.

No, this is not true - business entertainment (as opposed to staff entertainment) is not tax deductible. It is, therefore, less economically effective than other ways of drumming up business (e.g. advertising) and has become (in my experience) gradually less prevalent over the last few years, particularly as corporate belts have been tightened and finance directors have put the squeeze on generally aimless and ineffective schmoozing...though that's largely because finance directors rarely get invited.