HMRC internal manual

Business Income Manual

BIM45010 - Specific deductions: entertainment: what is business entertainment?

S45 Income Tax (Trading and Other Income) Act 2005, S1298 Corporation Tax Act 2009

The provision of free or subsidised hospitality or entertainment

Business entertainment means the provision of free or subsidised hospitality or entertainment. The person being entertained may be a customer, a potential customer or any other person.

The legislation defines entertainment as ‘includes hospitality of any kind’ but does not provide any further meaning for ‘entertainment’ or ‘hospitality’.

The Shorter Oxford English Dictionary defines hospitality as ‘the art or practice of being hospitable; the reception and entertainment of guests with liberality and goodwill’. Whilst the case of Bentleys, Stokes and Lowless v Beeson [1952] 33 TC 491 has been superseded by the introduction of the legislation specifically denying a deduction from trading profits for expenditure of business entertaining and gifts, the discussion of the meaning of ‘entertainment’ and ‘hospitality’ is still useful. Roxburgh J said at page 498:

‘I cannot myself see much difference between entertainment and hospitality, and if once hospitality arises then the relationship of host and guest follows as a matter of course.’

This idea of the host/guest relationship is fundamental to the meaning of business entertainment.

Over the years, the meaning of business entertainment has been refined. This is discussed further in BIM45011 - BIM45014.