Christmas parties could cost Shropshire companies more than they anticipated if they fall foul of tough tax rules.

That's the warning from Keith Winter, at Dyke Yaxley Chartered Accountants, in Shrewsbury, who said companies must be on their guard when it came to festive celebrations.

"When a company throws a party for its directors and employees, as long as you don't flout the rules, it's a tax-free benefit for everyone," said Keith.

"But there are strict guidelines that must be followed, the main one being that the cost per head for people attending must not exceed £150, including VAT.

"So particularly given the current difficult weather conditions, all it takes is a few of your guests to drop out and the price per head will rise over the limit.

"This could cost you dearly in terms of tax and National Insurance, on top of the money you've already paid out to book the celebrations."

But Keith said there were ways to ensure the party was an enjoyable event that would not require your company, or your staff, to pay out extra cash, no matter how few people turned up.

"There is a loophole in the legislation that means it doesn't matter who attends the party, as long as it's essentially for directors and employees.

"So you could ask your next door neighbour or friends to attend to make up the numbers - and if people drop out at the very last minute, you could even invite another table of guests at the restaurant to join you.

"The Taxman has shown that he is unlikely to bend the rules when it comes to Christmas celebrations and benefits-in-kind.

"So it's better to protect your company and your staff by knowing just what the legislation entails, and then you can enjoy the Christmas period safe in the knowledge that it's not costing more than you'd budgeted for."