Quid Pro Quo

In this week’s video blog, we would like to talk to you about something called the Quid Pro Quo concept. A lot of people recognise that entertainment expenses for a business are usually not allowed as a tax deduction, but there are exceptions to this rule! The exception is; if you take someone out to dinner or some other form of entertainment and that outing has a business motive, that expense would then become deductible. Say for example, you took a solicitor friend out to a football game so that you could pick their brains about legal issues about your business at the same time, that is an allowable deduction.

Quid Pro Quo

Quid Pro Quo

It is a similar concept when you take a client out, if that dinner or outing has an ulterior business motive where they need to sit and talk to you about your business then that also becomes deductible. This doesn’t just apply to entertainment; it also applies to things like gifts. Most of us know that giving a client a gift for no reason whatsoever is not tax deductible unless it meets certain criteria. However, if you give a someone a gift as part of a competition prize, for example, where they had to submit their details to you to enter, and it raised awareness of your business then that gift would then become a competition prize and it would then become tax deductible.

The concept: just because it’s entertainment or a gift doesn’t necessarily mean it’s not tax deductible, it depends on the kind of exposure you are getting for your business and the conditions relating to what you are giving away.

If you are interested in finding out more about what is and what isn’t tax deductible, then please get in touch with Northants Accounting on 01604 330129, we’ll be happy to help!

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