Well, this is a bit of a ‘how long is a piece of string’ and no mistake.
Coffee shops are everywhere, and personally, I love a coffee and a piece of red velvet cake, and if I’m meeting with a client, and their treat of choice is a cold brew with a flapjack, who can fault them? But can I claim? Probably not.
Why not?
You can’t claim under these circumstances because it’s classed as business entertaining, and you simply can’t claim any tax relief on it. Bish, bash bosh, job done. (albeit without the aforementioned cake).
Business entertaining is classed as being the provision of free or subsidised hospitality or entertainment to a potential or current customer. Purchasing that lovely treat for them, however generous, is classed as entertaining, and is simply not allowed.
But you can claim if you’re working away from home. For example, if you, or one of your staff is working away from home, and have to stay over, then the associated cost of that is allowed.
If that employee then entertained a client, the staff element of the transaction would be allowable, but the client element would not.
Let’s discuss the staff social time whilst we’re here, shall we?
The cost of providing staff entertainment is fully tax deductible by the company, and you can also recover the VAT too.
However, this is limited to £150 per employee, per year. If you exceed this limit, then the staff members will be taxed on subsequent events as a benefit in kind.
A mix of staff and non-staff?
If this is a ‘hosted event’, it’s probably going to be classed as business entertainment, and therefore not allowable. No tax deduction, no VAT recovery.
However, the staff Christmas party, which is not incidental to the entertainment of others, is deductible for tax purposes, on the understanding that all staff are invited. For example, if it’s a ‘directors only’ event, then it’s not tax deductible, because it’s not open for all.
So please, be inclusive and invite all staff members.
But don’t forget that £150 limit.
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