Restaurant tips as expense - The Book-keepers Forum (UK)

Dawn Brown · Newbie

Restaurant tips as expense

AICB · Senior Member

My feeling would be no - they're not claimable.
Business expenses are those you make which are wholly and exclusively for the conduct of the business. I think the tax man would argue that it's entirely up to you whether you spend your money on tips or not; the business won't go backwards if you decide not to tip.

Maybe I'm just feeling scrooge-like today, but that's what I'd expect her to say.

gbm · Guru

Hi Dawn,

You mentioned about being VATable - this is irrelevant as you can't claim VAT on entertaining anyway.

You don't get tax relief on entertaining either, which always seems to come as a big shock to clients!

HendyPhilhendy · Guru

gbm wrote:

Hi Dawn,

You mentioned about being VATable - this is irrelevant as you can't claim VAT on entertaining anyway.

You don't get tax relief on entertaining either, which always seems to come as a big shock to clients!

Its the hardest thing to explain to a client! Especially when they say it is the only way they can get a customer.

AICB · Senior Member

HendyPhilhendy wrote:

gbm wrote:

Its the hardest thing to explain to a client! Especially when they say it is the only way they can get a customer.

The tax man will doubt that it's the only way; I kind of agree, too.

But the way to recoup any disallowable costs of getting clients is to add the cost back into their fees. It's very simple.

-- Edited by AICB on Saturday 29th of January 2011 12:32:11 PM

adi2402 · Senior Member

gbm wrote:

Hi Dawn,

You mentioned about being VATable - this is irrelevant as you can't claim VAT on entertaining anyway.

You don't get tax relief on entertaining either, which always seems to come as a big shock to clients!

Although you can get tax relief for staff entertain, should you have any.

Dawn Brown · Newbie

Thanks for the replies. I appreciate you cant claim vat for entertaining clients but for staff xmas parties you can. It was just whether the tip counted as part of the expense. I have been told that it can count towards the yearly amount allowable per employee as staff entertaining. These vat rules can get very complicated!!!