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BUSINESS LIFE: Festive alert to generous bosses.

BUSINESSES have been warned they could face a tax demand if they give too much this Christmas.

Andy Farren, tax partner at HLB Kidsons in Coventry, said firms needed to be careful what they spent.

He said: "I don't want to be accused of spoiling the fun, but before your business starts planning lavish celebrations remember that you don't want the office night out to turn into a financial hangover the morning after.

"The annual limit you can spend on staff entertainment, without incurring tax, is pounds 75 per employee.

"If pounds 75 sounds reasonably generous, it is important to note that this is the maximum amount you can spend per head, over the entire tax year, if you want to avoid a tax liability.

Mr Farren advised that, to work out whether they were within the limit, businesses should add up all the costs for the year. These figures must include VAT and take account of all the costs. Divide the total annual figure by the number of staff attending to establish the expenditure per head.

He added: "Go over the limit on your annual bash - even by as little as pounds 1 - and your entire tax exemption will go up the chimney along with your note to Santa."
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Copyright 2001 Gale, Cengage Learning. All rights reserved.

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Title Annotation:Business
Publication:Coventry Evening Telegraph (England)
Date:Dec 11, 2001
Words:210
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