Finance Act, 1980

Amendment of section 24 (business entertainment expenses) of Finance Act, 1973.

56.Section 24 of the Finance Act, 1973 , is hereby amended—

(a) by the insertion after subsection (1) of the following subsection—

“(1A) In respect of any expenses incurred on or after the 27th day of February, 1980, in providing business entertainment, no sum shall be—

(a) deducted in computing the amount of profits or gains chargeable to tax under Schedule D, or

(b) included in computing any expenses of management in respect of which a deduction may be claimed under section 15 or 33 of the Corporation Tax Act, 1976 ,

in excess of 50 per cent. of the sum which, but for this subsection, would have been so deducted or so included.”,

(b) as respects the year 1980-81 and subsequent years of assessment and as respects any accounting period of a company which ends on or after the 6th day of April, 1980, by the substitution for subsection (3) of the following subsection—

“(3) (a) Where any asset is used or is provided for use, wholly or partly, for the purpose of providing business entertainment—

(i) if the expenses incurred or to be incurred in respect of the provision of the said business entertainment are not or will not be wholly, exclusively and necessarily laid out or expended for the purposes of a trade, no allowance under the specified provisions shall be allowed in respect of the use of the asset or the expenditure incurred in the provision of the asset to the extent that it is used or is to be used for the purposes of the said business entertainment,

(ii) if the expenses incurred or to be incurred in respect of the provision of the business entertainment are or will be wholly, exclusively and necessarily incurred for the purposes of a trade, no allowance under the specified provisions shall be allowed in respect of the use of the asset or the expenditure incurred in the provision of the asset to the extent that it is used or is to be used for the purpose of the said business entertainment save to the extent of 50 per cent. of the allowance which, apart from this subparagraph, would have been allowed.

(b) In this subsection ‘specified provisions’ means section 241, Chapter III of Part XIV, Chapters I and III of Part XV and Chapters II and V of Part XVI of the Income Tax Act, 1967 , and section 22 of the Finance Act, 1971 .”,

and

(c) by the substitution in subsection (4) of “subsections (1) and (1A) apply” for “subsection (1) applies”.