Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

Employment Income Manual

From
HM Revenue & Customs
Updated
, see all updates

Other expenses: entertainment expenses: disallowance under Section 356 ITEPA 2003: steps to follow

Section 356 ITEPA 2003

Entertainment expenses: steps to follow in deciding if Section 356 applies

Step 1 Decide if the employer is carrying on a trade, business, profession or vocation (see EIM32575) If the answer is no, Section 356 does not apply. You can consider the employee’s request for an expenses deduction using the general rule for employees’ expenses in Section 336 ITEPA 2003 (see EIM32615 onwards).
If the answer is yes, go on to Step 2.    
     
Step 2 Decide if the expenditure relates to the provision of entertainment, or a gift (see EIM32580) If the answer is no, Section 356 does not apply. You can consider the employee’s request for an expenses deduction using the general rule for employees’ expenses in Section 336 (see EIM32615 onwards).
If the answer is yes, go on to Step 3.    
Step 3 Decide if the case falls within the exceptions set out in EIM32585 If it does, Section 356 does not apply. You can consider the employee’s request for an expenses deduction using the general rule for employees’ expenses in Section 336 (see EIM32615 onwards).
If it does not, Section 356 applies and no deduction is due even if the expenses would have satisfied the rule in Section 336.    

See also the flowchart at EIM32650a.

The table at EIM32570 shows how the detailed guidance is arranged.