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HMRC internal manual

Business Income Manual

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

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

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 the legislation.

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
  • 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 S46(2) ITTOIA 2005 for unincorporated businesses and S1299(2) CTA 2009 for companies. For more information on this exemption, see BIM45030.

See BIM45062 for an example.

For guidance on the expenditure which is disallowed where the specialist provider invoices the business for mixed services, see BIM45061.