BIM45060 - Specific deductions: entertainment: expenditure paid to specialist providers: entertainment providers

Payments made to a third party (for instance, an events organiser) to provide hospitality on behalf of the business are entertaining expenditure and are disallowable under ITTOIA05/S45 for individuals and partnerships or CTA09/S1298 for corporate entities.

It is increasingly common for businesses to use specialist companies to entertain their customers. Typically, the specialist provides a package including tickets for a sporting, cultural or other event; a nearby marquee with food, drink and other attractions for guests; and perhaps transport to and from the venue. The specialist provider charges the trader a composite sum for the whole package. This sum is disallowable under the legislation.

Tax treatment of specialist provider

The expenditure incurred by the specialist in delivering the package to its customer is not disallowable under the legislation. This is because the specialist is providing hospitality in the normal course of its trade for payment. The expenditure incurred is therefore within the exemption in ITTOIA05/S46 (2) for individuals and partnerships or CTA09/S1299 (2) for corporate entities. - see BIM45030.