Business gifts

chadwick_robbie

After securing a major deal following a referral I would like to buy a watch for my contact.  Are there any legalities to consider and would I be putting any tax liabilities on my contact?  Thanks...

Jeremy535897

It is hard to know without understanding more about the circumstances. You cannot claim a deduction. They might be subject to tax if they are self employed and there is some connection to their business, or if there was an agreement that there would be a reward for making the referral. If they could in any way be regarded as your employee, you would have to operate PAYE. There is a wide range of circumstances, from asking a customer of yours if they can refer anyone to you and offering a reward in advance (clearly taxable) to a chat with a friend in a pub who spontaneously offers to introduce his friend to you, without any thought of reward either then or afterwards.

See https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim45090

Ray_Coman

Where the total cost of gifts to one person is not more than £50 per year and incudes some kind of advert for your business it would be tax deductible: A watch is a tax deductible gift, however gifts of food, drink or tobacco are not tax deductible.

oldbikebloke

Ray_Coman said:

 A watch is a tax deductible gift, 

as you said yourself, it would need to have a conspicuous advert on it 
- company name on the watch face?
- engraved on the back?
and cost <£50 all in.

A watch with those costs on top of the basic purchase price may not convey a particularly impressive image of the company - cheap tat!

Grumpy_chap

Does the recipient actually want a watch?

Jeremy535897

oldbikebloke said:

Ray_Coman said:

 A watch is a tax deductible gift, 

as you said yourself, it would need to have a conspicuous advert on it 
- company name on the watch face?
- engraved on the back?
and cost <£50 all in.

A watch with those costs on top of the basic purchase price may not convey a particularly impressive image of the company - cheap tat!

That's why I just said it is not tax deductible. It's inconceivable anyone would jump through all those hoops for a sub £50 watch!

Grumpy_chap

What policies does the recipient's employer have on receiving gifts?

theoretica

If we want to keep any gifts over £50 we need to buy them from our employer.

Ray_Coman

Jeremy535897 said:

oldbikebloke said:

Ray_Coman said:

 A watch is a tax deductible gift, 

as you said yourself, it would need to have a conspicuous advert on it 
- company name on the watch face?
- engraved on the back?
and cost <£50 all in.

A watch with those costs on top of the basic purchase price may not convey a particularly impressive image of the company - cheap tat!

That's why I just said it is not tax deductible. It's inconceivable anyone would jump through all those hoops for a sub £50 watch!

Your approach is probably more suitable.  If reciprocation can be shown, it is not really a gift but an expense incurred as part of the fee.  This stands up to HMRC scrutiny better for existing clients than prospects.