FP 9 Entertainment Hospitality and Gifts

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					                          Financial Procedure Note                                               FP 9

                                                                                              July 2010
                          Entertainment, Hospitality and Gifts


Financial Procedure Notes supplement Financial Regulations, providing detailed guidance on various
          topics. Failure to comply with these procedures could result in disciplinary action.




  1.     General Principles

  1.1    University funded entertaining/hospitality that is not business related is seen as a
         benefit provided by an employer to their staff and is therefore taxable in the same way
         as their salary.

  1.2    The University receives substantial public funding. It is also a charity. The Vice-
         Chancellor is the University’s accountable officer and can be called to account by
         Parliament’s Public Accounts Committee. The University is also subject to the Freedom
         of Information Act and expense claims of staff could therefore be placed in the public
         domain. As a general rule all staff who use University funds to provide entertainment or
         hospitality of any kind, whether this is reclaimed as an expense or charged direct to a
         budget, should be prepared to justify their actions publicly.

  1.3    For tax purposes a distinction is made between paying for business entertaining
         (entertaining as part of the furtherance of the University’s business) and non-business
         entertaining (entertaining for mainly social purposes). Non-business entertaining is
         usually taxable.

  1.4    Although the University is a charity this does not exempt it - or its staff - from these
         general principles. It is important, therefore, to ensure that entertainment expenditure is
         correctly identified and recorded to minimise the risk of exposure to tax and National
         Insurance Contribution (NIC). Where these rules are adhered to no income tax or NIC
         liabilities will arise for employees or other claimants in respect of entertainment
         expenses claimed or covered by the University.

  1.5    As a general rule, when a department is entertaining external visitors, this will be
         treated as hospitality and business entertaining. However, where the ratio of staff
         members to visitors exceeds 2:1, this will be seen as in house entertainment and a
         charge to tax will be applicable on the attendees.

  2.     University Policy

  2.1    Expenditure on entertainment and hospitality may only be incurred provided it is wholly,
         necessarily and exclusively in the furtherance of University business. All entertainment
         and hospitality must be proportionate and defensible.

  2.2    Claims for reimbursement of entertaining and hospitality expenses must be made on
         an Expenses Claim Form.

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2.3   Holders of corporate credit cards must not use their cards to claim any hospitality or
      entertaining expenses unless they have obtained prior written permission from the
      Director of Finance.

2.4   All hospitality and entertaining claims must be supported by receipts and accompanied
      by a ‘Hospitality and Entertainment Form’, disclosing the details set out in 3.1 below.
      This is required for tax compliance purposes as well as helping claimants demonstrate
      accountability and proportionality.

2.5   All expense claims for entertainment must be authorized by the claimant’s line
      manager and supported by appropriate invoices and receipts. In authorising claims the
      line manager is authorizing that the claim is legitimate, relates to the furtherance of
      University business, is proportionate and complies with tax requirements.

2.6   It is not permitted to use petty cash to pay for or reimburse entertainment expenses.

3.    Requirement to Provide Details in Support of all Hospitality and
      Entertainment claims:

3.1   Where hospitality or entertainment expenses are claimed for reimbursement to an
      individual on an Expenses Claim Form, the following details must be disclosed on the
      ‘Hospitality and Entertainment Form’ which should be attached to the Expense Claim
      Form:

      i      The name(s) of all attendee(s), including any University staff;
      ii     The organization which attendees represent;
      iii    The purpose of the entertainment (for example, “negotiation of contract”).
      iv     The name and department of the person submitting the claim

3.2   Costs which are incidental to business entertainment (for example, the cost of a taxi to
      a restaurant where a guest is to be entertained), should be categorized as business
      entertainment on the Expenses Claim Form and not claimed under “Travel”.

4.        Refreshments, Meetings and Business Entertainment

4.1   Where refreshments or food are provided as part of a business meeting then these will
      usually be deemed not to be taxable - and may, therefore, be provided or claimed - as
      long as the following rules are adhered to:

      Refreshments during a meeting:

4.2   Light refreshments (tea, coffee, biscuits etc but not sandwiches) provided before or
      during a meeting will not be taxable as long as a record is made and retained by the
      individual arranging the meeting of the reason for the meeting, together with a copy of
      the agenda, including the names of the attendees.

          Sandwiches and working meals - on University premises:

4.3   Working lunches or other types of working meal, including sandwiches or any
      refreshments more substantial than those covered at 4.1(a) above, will not be taxable
      and may be reclaimed but only as long as:

      i      The meal is an integral part of the meeting;
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      ii  The meal is held on University premises;
      iii Alcohol is not consumed;
      iv  Such meetings do not take place frequently;
      v   Full details of the reason for the meeting and attendees are given with any claim
          made or kept where the cost is met from University funds;
      vi. A copy of the agenda for the meeting, its minutes or some other formal record is
          kept of the business discussed.

4.4   ALL of the above conditions must be met. Failure to do so, or failure to identify the list
      of attendees may result in the organizer of the meeting being liable for a tax charge on
      all attendees.

4.5   Where a meeting has concluded and the attendees have lunch or dinner immediately
      afterwards, the lunch or dinner cannot be classed as being a part of the meeting.

      Business lunches and working meals - elsewhere:

4.6   Where working meals are taken other than on University premises, they will not be
      taxable and the full costs may be claimed or provided, but only as long as:

      i       Third party speakers, lecturers, business associates or clients are in attendance
              and the meal does not include solely University staff;
      ii      There is a genuine business need to host the meeting with a meal ‘off-site’ (this
              may include the time of day if it is outside normal working hours, or the use of
              facilities which are unavailable on University premises);
      iii     Such meetings do not take place frequently;
      iv      Attendees to such meals are not restricted i.e. such meals are ‘open’;
      v       Full details of the reason for the meeting and attendees are given with any claim
              made or kept where the cost is met from University funds.

4.7   For clarity, the following examples are acceptable as permitted business entertaining
      where all of the conditions given above are met:

          -   Examiners lunches or meals;
          -   Meals for visiting lecturers or speakers provided immediately before or after the
              event at which they are speaking;
          -   Meals involving collaborators on research projects or business projects;
          -   Meals involving potential or actual sponsors or donors;
          -   Meals involving officials of government or other publicly-funded organizations.

4.8   The University’s guideline for permitted business entertaining, set out in 4.7 above, is
      £35 per head.

      University-specific events:

4.9   The following events are considered to be non-taxable or permissible as business-
      related entertaining, when held either on University premises or elsewhere:

      i       New student dinners or student welcoming parties;
      ii      Post-graduate entertaining;
      iii     Drinks or light refreshments provided at the start of a new course or in association
              with lectures or seminars.

      The majority of attendees at the events must not be University staff.
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       Other meals:

4.10   Where other meals are taken in the course of travel away from the University, the
       regulations in respect of subsistence apply.

5.     Staff Entertainment, Other Events and Gifts

5.1    Entertainment provided to or claimed by University staff which does not fall into the
       ‘Business Entertainment’ categories defined above is likely to be taxable and usually is
       not permitted under University Expenses policy, except where specifically covered in
       the following rules.

       Annual parties and similar functions:

5.2    Certain events or functions for staff which are paid for by the University are not
       considered to be a taxable benefit. The following key conditions must apply:

i      The event is regular in nature (usually annual) and not a one-off;
ii     The event is open to staff generally and is not limited to specific groups;
iii    The total cost of all such events is no more than £35 per head per annum;
iv     Where groups organize their own events which do not satisfy all of the above
       conditions, the organizer must ensure that individuals pay for their own meals and
       entertainment as none of the expenses will normally be reimbursed by the University.

5.3    Managers and organisers must seek the prior consent of their Pro-Vice Chancellor in
       the case of faculties and the Registrar in the case of Professional and Commercial
       service to hold such events.

       Other forms of staff entertaining:

5.4    Events which are not open to staff generally, or events which are not regular in nature
       are not generally exempt from taxation and are not, therefore, able to be reimbursed by
       the University.

5.5    There may be instances, however, where, subject to funding being available, one-off
       events can be paid for or reimbursed in whole or in part. This is subject to a special
       arrangement - a PAYE Settlement Agreement-‘PSA’. It should be noted that in these
       instances tax is still payable but is borne by the funding department or section. As
       such, the cost of the entertainment plus tax must be taken into account. Further details
       of this should be obtained form the Payroll Manager.

       Gifts to employees upon retirement:

5.6    For employees retiring after 40 or more years’ service the University can make a
       contribution towards a retirement gift. The amount of this contribution is reviewed
       regularly by Human Resources. From 1 August 2010 the amount is £300. This sum
       cannot be supplemented with any other form of University funding. This money must be
       used to purchase a gift and under no circumstances can the employee be given the
       money, either in the form of cash or a gift voucher.

5.7    Further advice on any tax implications can be sought from the Payroll Manager. (Any
       amount collected by colleagues within the department is not currently subject to any tax
       liability and it is up to departments to decide how this should be organized.)

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      Other gifts to employees:

5.8   Strictly, all gifts or benefits provided to employees are subject to tax and NICs unless
      there is a specific exemption.

5.9   HMRC takes a pragmatic view of benefits of a trivial nature, however, and do not
      normally consider these to be taxable. An example might include flowers for staff on
      special occasions. Gifts or benefits of this nature, therefore, are permissible only as
      long as they are infrequent, of low value and do not include money or vouchers. Gifts of
      money or vouchers are always treated as taxable.



      Summary of Financial Limits

      5.2      Staff entertainment (eg annual parties)            £35 per head per year
      5.6      Gifts for retirees with 40 years or more service   £300 (not cash/vouchers)
      4.7, 4.8 Guideline for permitted business entertaining      £35 per head




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                                                                                                 Hospitality and Entertainment Form

 This form should be attached to the ‘Claims for reimbursement of travel/subsistence’ form when any hospitality or entertainment expenses are being
 reclaimed. Receipts should be attached to the ‘Claims for reimbursement of travel/subsistence’ form.

 Name                                            _____________________________________________________________

 Department/Section:                             _____________________________________________________________

 Purpose of Hospitality/Entertainment:           _____________________________________________________________

                                                 _____________________________________________________________

 Location / Date                                 _____________________________________________________________



Names of Attendee(s)      University        External Organization             Names of Attendee(s)       University       External Organization
                            Staff                                                                          Staff
                           Yes/No                                                                         Yes/No




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