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HMRC's internal guidance concerning business entertainment is contained in BIM45000 onwards.

Expenditure on business entertainment and gifts is expressly disallowed by statute¹. Entertainment includes hospitality of any kind², although this term is not defined in the legislation. Further guidance is provided in HMRC's Manuals³.

The expenses incurred in providing entertainment or a gift include expenses incurred in providing anything incidental to the provision of entertainment or a gift⁴. The term 'incidental' is not defined for this purpose, but HMRC states⁵ that it means any expenditure that is incurred directly or indirectly in connection with the provision of entertainment. This might include payments to a third party for the organisation of entertainment or the costs of issuing invitations to customers and it includes travel⁶. It will also include the cost of maintaining assets, such as yachts, which are used for business entertainment purposes.

However, the disallowance does not apply where:

1. Ìý

   •ÌýÌýÌýÌý it is the company's business to provide entertainment, such as an events manager, and it is