Win or lose?

My client is self-employed and has about a dozen employees. It transpires that since the start of the year he has been paying for ten lottery tickets each week for the employees – with payment coming out of the firm’s petty cash. No major wins yet!

This seemed straightforward but I am now starting to wonder how this should be treated for tax purposes.

Are we dealing with additional remuneration or is this a benefit in kind? And how is tax and National Insurance accounted for?

My other thought is should we simply treat the payment from petty cash as part of the boss’s drawings? If we did would this be a problem if HMRC discovered that the payment was actually used for the benefit of his employees rather than for him? Would it make a difference if the boss was part of a syndicate?

May we have...