A Revenue clampdown on companies submitting expenses for staff entertainment and hospitality, including department lunches or events for retiring staff, has been described as “baffling”.
The tax authority insists that some hospitality events including those provided to a section of staff represent a taxable benefit in kind (BIK) and are understood to be auditing the expenditure that businesses make on staff events to determine if there is a tax liability.
Chartered Accountants Ireland (CAI), the umbrella body for chartered accountants here, said businesses were “up in arms” at Revenue’s tougher stance on the issue.
[ Benefit in kind: Be careful those office perks don’t come back to bite you in taxOpens in new window ]
“Applying a BIK tax charge when small employers provide sandwiches, biscuits or even coffee to staff at the odd team meeting is completely baffling,” said CAI director of public policy Cróna Clohisey.
“For those lucky enough to work for a larger company that has a canteen, there is no BIK on food provided — this is a stark difference in approach,” she said.
“It’s difficult enough for SMEs to attract and retain staff and these small extras make a difference — strictly applying this tax charge essentially doubles the costs for these employers, not to mention the headache the administration of it brings,” said Ms Clohisey.
“Businesses have told us that it is no longer worth their while providing these small incidental extras to their teams. The knock-on impact of this decision on the local cafes and restaurants that supply these businesses shouldn’t be underestimated,” she said.
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When contacted, Revenue said there had been no change in policy, insisting staff entertainment (other than meals in a staff canteen provided to staff generally) was a taxable benefit under section 118 of the Taxes Consolidation Act 1997.
“There has been no change in Revenue policy regarding staff entertainment expenses. Revenue monitors tax compliance on an ongoing basis, using a proportionate and focused approach to identify and respond to risks relevant to each respective segment,” said a Revenue spokesman.
“As part of Revenue’s business compliance programme, which includes payroll-related reviews and interventions, Revenue examines expenditures on staff entertainment, along with other areas of potential tax risks related to staff remuneration, as a matter of course,” he said.
According to Revenue, BIK is defined as “any benefit which employees receive from their employment or office which is not included in their salary or wages”.
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