Employers who pay for their employees and sub-contractors to attend training courses may be interested in the following directive from HMRC, issued July 2015.
The cost of food and accommodation provided for employees attending training courses for the purpose of the trade is not disallowable under the legislation. However, if food and accommodation are provided as part of training given to any other person free of charge then the cost is entertainment and is disallowable.
Traders may provide training for people who are not their own employees. Examples would be self-employed sales staff or commission agents. Although the training itself (such as the cost of speakers or hire of a room) is an allowable expense, any food or overnight accommodation provided for the attendees is disallowable entertainment.
This principle was confirmed in the VAT case of Customs and Excise v Shaklee International, where the point at issue was the food and hotel costs of residential courses organised by a sales organisation for its distributors. Similarly, the cost of any food or overnight accommodation provided at recruitment or selection events for prospective self-employed sales staff or commission agents is disallowable entertainment. This is because, prior to their selection, they are unlikely to be directly involved with the trade, are not under any obligation to provide, and are in fact not providing, proper and sufficient quid pro quo.
Traders may also provide training for their franchisees. In many such cases the (usually lump sum) payment made for the franchise secures a commitment by the franchiser to provide training. In this event, the training is not provided free of charge and any food and accommodation provided is part of the cost of the training and is not disallowable under the legislation. However, any hospitality over and above that which is included in the terms of the franchise is disallowable under the legislation.
Source: New feed.