The first step in deciding if an employee is entitled to a deduction for entertainment expenses is to decide if the employer is carrying on a trade, business, profession or vocation (see EIM32565).
Section 356 ITEPA 2003
applies to the employees of concerns such as:
| Section 356 does not
apply to employees of non-trading concerns such as:
|
Note that it is the type of activity that determines whether Section 356 applies. If the employer carries on a trade, etc, Section 356 will apply irrespective of whether the employer is a company, a sole trader, a partnership or a nationalised industry.
Some organisations may carry on a mixture of trading and non-trading activities. In that case, Section 356 will potentially apply to employees who are engaged in the trading activities of such concerns, but not to those engaged in the non-trading activities.
If you are in doubt whether a particular activity constitutes a trade, business, profession or vocation, consult the Inspector dealing with the accounts of the organisation in question.
