Christmas cabaret

My client was talking to a friend in the pub about this year’s staff Christmas party which is going to cost my client £120 plus VAT per person for a five-course meal and cabaret at a top restaurant in Manchester. The client has enjoyed a very successful trading year and has also agreed to pay the cost of one guest to attend per employee ie spouses partners etc.

The friend told my client that if the staff are told that they must make a £5 donation to charity for each guest ticket input tax can be claimed on the cost of the guest meals as well as those of the staff as long as he accounts for output tax on the £5 receipt. Is this correct?

Would the outcome be any different if my client just charged £5 for the spouses and kept...