Corporation Tax Act 2009

1298 Business entertainment and gifts

(1) This section applies if a company incurs expenses in providing entertainment or gifts in connection with a business which it carries on.

(2) The general rule is that—

(a) no deduction is allowed for the expenses in calculating income from any source for corporation tax purposes,

(b) no deduction is allowed under section 1219 for the expenses, and

(c) expenses to which this section applies are not to be brought into account under section 76 of ICTA (expenses of companies carrying on life assurance business) as expenses payable.

(3) The general rule prohibits the deduction, or the bringing into account, of expenses which are incurred—

(a) in paying sums to or on behalf of an employee of the company, or

(b) in putting sums at the disposal of an employee of the company,

if (and only if) the sums are paid, or put at the employee’s disposal, exclusively for meeting expenses incurred or to be incurred by the employee in providing the entertainment or gift.

(4) The general rule is subject to exceptions—

• for entertainment (see section 1299), and

• for gifts (see section 1300).

(5) For the purposes of this section and those two sections—

(a) “employee” includes a director of the company and a person engaged in the management of the company,

(b) “entertainment” includes hospitality of any kind, and

(c) the expenses incurred in providing entertainment or a gift include expenses incurred in providing anything incidental to the provision of entertainment or a gift.