Quick answer
The entertaining tests look inside accounts whose name says entertainment, entertaining or hospitality, and then read every transaction on them. Entertaining posted to an unrelated code, such as sundry expenses or marketing, is not found by those tests. It is a signal, not an audit, and it is better to know that than to assume the account has been swept.
What the tests do find
Within an entertainment-named expenditure account, every line is read individually:
Input VAT claimed on the line, taken from the VAT figure the ledger recorded rather than a rate assumed from the amount. Where VAT was claimed on client entertainment, the journal to repay it is drafted for you and the aggregate is routed through the error-correction thresholds.
What the spend actually was, line by line: client entertainment, staff subsistence while travelling, a staff annual event within the exemption, or staff entertainment outside it. The wording of the line is used as a signal that recommends an answer; you confirm it, in bulk or one at a time.
Staff and welfare accounts are deliberately left out of the input VAT test, because that VAT is recoverable. An entertainment word in an income account is not treated as a claim.
What catches a miscoding some of the time
Two other checks can reach a line that sits elsewhere. The expense account review looks across the cost accounts for the patterns it does know, and a material variance on a cost line raises a review prompt of its own. Neither is a sweep for entertaining specifically.
There is also a backstop the other way: if an entertainment-named account reaches the end of the tax computation with nothing added back, AllDone raises that loudly with the account and the amount, rather than letting it pass in silence.
How to look yourself
Open the profit and loss review and the working papers for the cost lines that matter, and use the ledger detail behind them. The review screen is where an unusual movement on a cost code surfaces, and it is quicker than reading the ledger cold.
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