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Section 265(5) ITEPA 2003

The word ‘entertainment� has a very wide meaning. It is wider than hospitality since the legislation expressly says it includes hospitality of any kind. But it does not include a mere gift such as tickets to the theatre or to a football match. An event of that kind will not normally count as entertainment unless the third party provider, or his representative, is present to look after, or ‘entertain�, the guests. (Remember that Section 324 ITEPA 2003 deals with small gifts to employees from third parties (see EIM21715 onwards.)

The statutory exemption should thus be taken as covering:

• any form of hospitality (dinners, parties, hospitality tents at sporting events, etc.)
• events such as theatrical performances or sporting events, such as Wimbledon, where a host invites someone to accompany him as a guest.

Any costs associated with the entertainment, such as transport or overnight accommodation, are included in the exemption.

The provision of a holiday in the United Kingdom or abroad will sometimes count as ‘entertainment� for the purposes of the exemption. This would apply, for example, if a representative of the provider was present throughout. In such cases, take special care to see that the exemption is not precluded by the ‘particular services� condition in EIM21837.