Christmas Gifts: Staying on the Right Side of the Line

For many SMEs, Christmas is one of the few times when trading partners exchange small tokens of thanks.

A box of biscuits or a bottle of wine can make business relationships feel more personal. But even SMEs must remember that corporate gifting is still regulated. A well-intended gesture can raise legal and ethical questions if it gives the impression of influence.

Why SMEs must think carefully

Many smaller businesses assume that bribery laws only affect big businesses or public bodies. In reality, SMEs are covered by the same rules. They may even face greater risk. Limited compliance resources, close relationships and informal habits can blur boundaries. One poorly judged gift can create scrutiny that a small business may struggle to handle.

This is why it is vital to understand the line between acceptable hospitality and potential bribery.

What counts as a genuine gift

A legitimate business gift shows appreciation. It is not meant to sway a decision. It should have no strings attached, carry no expectation and avoid strategic timing. SMEs often rely on long-term relationships, so gestures should stay modest and transparent.

A small, end-of-year gift is unlikely to cause concern. But the same item given while a contract is up for renewal can look tactical. Context matters, and perception can shift quickly.

Understanding the legal framework

The UK Bribery Act 2010 applies to every organisation, no matter its size. It bans offering or receiving any advantage that could influence someone involved in business activity. This includes cash, gifts, hospitality, services or anything else of value.

Key points for SMEs:

• “We didn’t realise” is not a defence.
• A business can be liable for the actions of employees, partners, agents or consultants.
• The Act applies inside and outside the UK.
• Failure to prevent bribery is an offence, even if the business did not authorise the conduct.

Christmas may be a time of goodwill, but the law does not relax for the festive season.

Keeping gifts proportionate

Gifts and hospitality sit on a sliding scale. Low-cost seasonal treats are rarely a problem. These are recognised as goodwill gestures that support healthy relationships.

Issues arise when gifts appear excessive or poorly timed. Luxury items, travel, premium events or expensive electronics are difficult to justify. Some SMEs try to match the practices of larger competitors, but this can create unnecessary risk. Extravagance is more noticeable when it comes from a small business.

The rule of thumb is straightforward: would an independent person think the gift might influence a decision? If there is any possibility of the answer being ‘yes’, it should be declined or reviewed.

Intent and perception matter

Authorities do not need proof of an explicit deal. If circumstances suggest the giver hoped to gain an advantage, or the recipient might feel under any pressure, that is enough to raise concern.

A director may think they are building a relationship. But if the gift is high-value or the timing looks suspect, regulators may see it differently. Even well-meaning employees can expose the business if they misjudge what is appropriate.

Dealing with the public sector

The risk is higher when interacting with the public sector. Planning applications, council tenders or supply contracts often involve officials who must stick to the rules. Any attempt, real or perceived, to influence a decision can escalate fast.

Across industries, expensive hospitality and high-value gifts have been linked to major investigations. While SMEs rarely operate at that level, the same principles apply: public money and trust must be protected.

Learning from major corporate failures

Large bribery cases may seem distant from SME life, but they offer useful warnings. Many scandals started with gifts that seemed harmless. Later, investigators found patterns: luxury trips disguised as “training,” premium tickets described as “meetings,” or costly items hidden as “marketing expenses.”

SMEs may not offer such lavish perks, but the same risk exists. When gifts move from appreciation to influence, they become liabilities.

Creating clear internal standards

SMEs can reduce risk by putting simple safeguards in place:

• A short, practical gift and hospitality policy.
• Clear limits on value and timing.
• A central log for gifts given or received.
• Approval requirements above certain thresholds.
• Straightforward training that explains risks in plain language.

Formal policies may feel unnecessary for small teams, but the law expects reasonable steps to prevent wrongdoing. A simple policy is better than none.

Third-party risks and charitable giving

Risk does not disappear just because a gift is indirect. Benefits given to a contact of a client, donations to a charity linked to a decision-maker, or hospitality offered through an third-party can all fall under bribery rules.

Transparency, documentation and good judgement remain key.

Managing the Christmas rush

December often brings an increase in gifting, which can make oversight harder.

SMEs should:

• Apply the same rules all year round.
• Remind staff that value and timing matter.
• Decline or return gifts that feel inappropriate.
• Encourage open conversations rather than assumptions.

Handled badly, a gift can harm a relationship or even prompt a report.

Final reflections

Christmas gifting can be positive and good for business when done with care. But SMEs cannot ignore bribery risk simply because they are small. Regulators will not. With proportionate gestures, clear policies and transparent practices, businesses can enjoy the season without legal or reputational consequences.

About the author

John Roberts is a Partner and Director at Austin Lafferty Solicitors. Austin Lafferty Solicitors is a Glasgow-based law firm offering a full-service practice for small and medium-sized businesses.