Blind leading the blind ...

From The Metro:

Businesses could be banned from claiming back tax on corporate entertainment visits to lap-dancing clubs, after Equalities Minister Harriet Harman denounced the practice... At present, companies can claim back VAT at 15% on money spent taking staff out for the evening for team-building purposes (1), as well as offsetting the cost of entertaining clients against corporation tax (2). But Ms Harman said that going to lap-dancing clubs should not be regarded as a legitimate business expense (3).

She told a meeting on Thursday ... "Why should you be able to get tax relief for a night out at a lap-dancing club where effectively you are discriminating against women employees (4) in doing so?"

Hey! Let's make complete tits of ourselves by trying to change the rules without knowing what the rules are in the first place! From Taxation Web:

DON’T claim the VAT on entertaining clients and prospective clients, including that on the staff doing the entertaining (but DO claim the VAT paid on entertaining your staff, such as a summer barbecue or Christmas party)

So to summarise:

(1) You can indeed reclaim VAT on staff outings, but you cannot reclaim VAT on the expense of entertaining clients anyway, so that statement is misleading.

(2) You cannot deduct the cost of entertaining clients from the profits for corporation tax (s577 ICTA 1988), so that statement is a lie. Conversely, the employer can deduct the cost of staff outings, but any expenses above a de minimis then go on the employees' forms P11D, so it's six of one and half a dozen of the other (the PAYE and NIC are roughly equal to the corporation tax deduction and VAT reclaim - there is no overall tax relief).

(3) Firstly, she used the s-word, thus invalidating her own argument under the usual rules. Secondly, a business expense is something which the owner of the business thinks will further the interests of his business, however strange that may seem to others.

(4) What about female employees in lap-dancing clubs? The changes are clearly intended to harm their employment prospects.

This has got to be up there with Harriet's suggestion that witnesses in domestic violence cases be given anonymity.