Gifts and hospitality from clients

Q: When is a gift prohibited outright?

Two rules apply before any judgement about value. The law. R340.5 requires you to understand and comply with laws on bribery and corruption. Section 2 of the Bribery Act 2010 makes it an offence to request, agree to receive or accept an advantage intending that a function will be performed improperly, or as a reward for improper performance. Section 7 makes a commercial organisation, which includes a partnership, guilty if an associated person bribes someone to obtain business for it, unless it had adequate procedures to prevent bribery. Ministry of Justice guidance says the Act is not intended to criminalise reasonable and proportionate hospitality, but that hospitality can be used as a bribe. Intent to influence. R340.8 prohibits accepting, or encouraging others to accept, an inducement that you conclude, or that a reasonable and informed third party would be likely to conclude, is made with intent to improperly influence behaviour. R340.7 applies the same rule to offering. Paragraph 340.9 A2 says doing so breaches the principle of integrity.

Q: How does this work in practice?

Illustration only. A small practice receives three things in December. A client sends a hamper worth about £40 to the whole office: it is customary, offered to a group and not tied to a decision, so it is accepted and logged. A second client sends a partner a bottle of wine at Christmas: trivial, and logged. A third client, whose business sale the partner is advising on, offers the partner and spouse two tickets to a major tennis final the week before completion. Timing, value and targeting all point towards a threat, and the partner declines and records the offer.

Under section 340 of the ICAEW Code of Ethics you must never accept a gift or hospitality that is, or that a reasonable and informed third party would think is, intended to improperly influence you. Trivial and inconsequential items are acceptable. Anything more needs its threat assessed and addressed, for example by declining, returning or reimbursing it, or recording it in a log monitored by senior management. Audit and assurance teams face a stricter rule: nothing unless the value is trivial and inconsequential.

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What counts as a gift or inducement?

The code deals with gifts and hospitality as types of inducement. Paragraph 340.4 A1 defines an inducement as an object, situation or action used as a means to influence another individual’s behaviour, though not necessarily with intent to influence improperly. Its examples are gifts, hospitality, entertainment, political or charitable donations, appeals to friendship and loyalty, employment or other commercial opportunities, and preferential treatment, rights or privileges. ICAEW’s helpsheet adds that a staff discount offered by an audit client is a gift, and that a subsidised canteen is hospitality.

Paragraph 340.2 identifies the threats: self interest, familiarity and intimidation, particularly to integrity, objectivity and professional behaviour. This page deals with the ethical position. The tax treatment is separate: see business entertainment and client gifts and gifts from third parties to employees.

When is a gift prohibited outright?

Two rules apply before any judgement about value.

The law. R340.5 requires you to understand and comply with laws on bribery and corruption. Section 2 of the Bribery Act 2010 makes it an offence to request, agree to receive or accept an advantage intending that a function will be performed improperly, or as a reward for improper performance. Section 7 makes a commercial organisation, which includes a partnership, guilty if an associated person bribes someone to obtain business for it, unless it had adequate procedures to prevent bribery. Ministry of Justice guidance says the Act is not intended to criminalise reasonable and proportionate hospitality, but that hospitality can be used as a bribe.
Intent to influence. R340.8 prohibits accepting, or encouraging others to accept, an inducement that you conclude, or that a reasonable and informed third party would be likely to conclude, is made with intent to improperly influence behaviour. R340.7 applies the same rule to offering. Paragraph 340.9 A2 says doing so breaches the principle of integrity.

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How do you judge whether there is intent?

Paragraph 340.9 A3 lists the factors:

the nature, frequency, value and cumulative effect of the inducement;
its timing relative to any decision it might influence;
whether it is a customary or cultural practice, such as a gift for a religious holiday or wedding;
whether it is ancillary to a professional service, such as lunch during a business meeting;
whether it is offered to one person or a broader group;
the roles and seniority of those involved;
whether accepting would breach the client’s own policies;
how transparently it is offered;
whether it was required or requested by the recipient;
the offeror’s known behaviour or reputation.

Even where there is intent and you decline, threats may remain. Paragraph 340.10 A2 suggests telling senior management or those charged with governance at the client, or amending or ending the relationship.

What if there is no intent to influence?

Paragraph 340.11 A2 says that if an inducement is trivial and inconsequential, any threat is at an acceptable level. Above that, threats can still arise. The code’s examples (340.11 A3) are hospitality from the prospective buyer of a client while you advise the client on the sale, regularly taking a client to sporting events, and accepting hospitality that would look inappropriate if made public.

Paragraph 340.11 A5 says threats can be eliminated by declining, or by moving the work to someone else who would not be influenced. Paragraph 340.11 A6 lists safeguards:

being transparent with senior management of the firm or client;
registering the gift in a log monitored by senior management or the person responsible for ethics compliance;
having an independent reviewer check the work or decisions for that client;
donating the gift to charity and disclosing the donation;
reimbursing the cost of hospitality;
returning a gift as soon as possible after accepting it.

The rules reach family too. R340.12 requires you to stay alert to inducements offered by a client to your immediate or close family, and R340.13 requires you to advise them not to accept where there is intent to influence. The code’s example is a client offering your spouse a job outside the normal recruitment process while you value the client’s business for a sale.

What stricter rules apply to audit and assurance clients?

R420.3 of the code says a firm, network firm or audit team member shall not accept gifts and hospitality from an audit client unless the value is trivial and inconsequential, and 420.3 A2 adds that even a trivial gift is barred if there is intent to influence. R906.3 applies the same rule to other assurance clients.

For UK audits the FRC Revised Ethical Standard 2024 also applies. Paragraph 4.38 prohibits the firm, its partners, covered persons and those closely associated with them from offering or accepting gifts, favours or hospitality from an entity relevant to the engagement unless an objective, reasonable and informed third party would consider the value trivial or inconsequential. Paragraph 4.40 requires the firm to have policies on the nature and value of acceptable gifts and hospitality, with guidance for staff, and 4.41 extends that to entities likely to become audit clients. Paragraph 4.42 requires the cumulative effect of repeated hospitality to be considered. Under 4.43, team members with doubts consult the engagement partner, who refers doubts about their own position to the Ethics Partner.

How should a firm set limits and keep a log?

The code mentions a log as a safeguard and the FRC standard requires policies for audit firms, but neither sets a monetary limit. ICAEW’s helpsheet says firms may set monetary limits, which help to run a register, provided limits do not stop people considering other factors. As one benchmark it mentions the £50 limit that tax law applies to deductible branded gifts to the same person in a tax year (section 47 ITTOIA 2005). It also notes:

the cost of a spouse’s place counts as part of the benefit to you;
a zero tolerance policy would ban accepting a coffee at a client meeting and may be unduly burdensome;
a high value event, such as sporting tickets, should be followed by a longer gap before the next one.

A practical register records the date, client, recipient, description, estimated value, whether it was accepted, declined or returned, who approved it and any follow up action. Review it periodically by client to spot frequency and cumulative value.

How does this work in practice?

Illustration only. A small practice receives three things in December. A client sends a hamper worth about £40 to the whole office: it is customary, offered to a group and not tied to a decision, so it is accepted and logged. A second client sends a partner a bottle of wine at Christmas: trivial, and logged. A third client, whose business sale the partner is advising on, offers the partner and spouse two tickets to a major tennis final the week before completion. Timing, value and targeting all point towards a threat, and the partner declines and records the offer.

What mistakes cause problems?

Looking only at value, ignoring timing, frequency and who is targeted.
Logging gifts but never reviewing the log.
Forgetting that family members can be the route for an inducement.
Applying the general code test to an audit client instead of the stricter trivial and inconsequential test.
Overlooking gifts the firm offers to clients; R340.7 applies to offering as well as accepting. Related fee issues are covered in fees, commissions and referrals.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.