Are you an avid fan of one of the two big Sheffield clubs? Perhaps you have a season ticket at a South Yorkshire club like Barnsley, Doncaster Rovers, Rotherham United or even our local non-league team Goole AFC? Maybe you’re a regular match-goer in a totally different part of the country?

Whether it’s entertaining clients or a social event with your colleagues, entertaining can be one of the most enjoyable aspects of having your own business, and it can even strengthen relationships with employees or clients. If you’re considering taking clients or staff to football matches through work, it’s vital to be aware of whether or not this can be tax-efficient – especially when season tickets are so expensive.

The rules are complicated. As accountants for South Yorkshire businesses, we can outline everything you need to know – and we can also deal with such matters on your behalf if you’d rather simply leave that to the experts. We can explain the rules regarding VAT and business entertainment, including how entertaining staff or clients is seen from a tax and accounting point of view.

Business entertainment

According to HMRC, business entertainment should be provided free of charge to persons who are not employees. Any kind of hospitality can be seen as entertainment, such as the supply of food and drink or accommodation, using capital assets for entertainment purposes, or providing event or venue tickets.

Employee entertainment

The entertaining of employees may be treated as allowable – or could be considered a benefit in kind. The rules regarding employee entertainment are complex, and depend on factors such as the type of entertainment concerned. For example, an annual staff party could be allowable for Corporation Tax as long as under £150 per head is spent on items including food, drinks, tickets, accommodation and travel, and other terms are met.

Director or partner entertainment

Where entertainment is solely for directors or partners, the VAT cannot be reclaimed, but if directors and partners attend events alongside employees, the VAT can be reclaimed.

Corporate boxes

How corporate boxes are treated depends on how they are used and by whom. If a business buys two football season corporate box tickets, and takes a client, the VAT isn’t recoverable and nor is the corporation tax deductible, because it is business entertainment. If it is used for employee entertainment, then the VAT is recoverable and it is an allowable expense for corporation tax purposes. It is, however, a benefit in kind for both parties – unless the tax is paid via a PAYE settlement agreement.

Client entertainment

Entertaining current or potential clients does not constitute an allowable Corporation Tax deduction, but by paying from the business account, you will save the income tax. Where an employee is hosting, no corporate entertainment VAT can be reclaimed.

Overseas clients

HMRC rules state that VAT may be reclaimed on entertaining overseas customers – they see it as “of a kind and on a scale which is reasonable”. Additionally, if you or a staff member’s attendance is necessary, then the VAT on costs is also recoverable. VAT cannot be reclaimed on what is considered “corporate hospitality”, including sporting events.

We can help with all your taxing issues

As you can see, the tax rules and how they might apply to football season tickets are complex, so it’s always worth consulting an expert. Here at Adaptive Accountancy, we can help sole traders, start-ups, subcontractors, and family businesses with their tax calculations, finding the most cost-effective way to treat such expenditure – with the aim of saving you both time and money.