- Client entertaining expenses have strict rules and limitations regarding VAT recovery.
- VAT cannot typically be reclaimed on discretionary expenses such as food and drink, accommodation, leisure activities, business gifts above 50 pounds, hospitality at events or conferences, and use of capital assets for entertainment purposes.
- VAT can be claimed on expenses incurred when entertaining employees, provided the costs are for business purposes.
- Examples include annual staff parties, team-building activities, and meals during business training events.
- For VAT to be recoverable, the entertainment must be offered to all employees, not just a select few.
- If non-employees attend the event, only the portion of VAT attributable to employees can be reclaimed.
- Employees include individuals employed by the business, directors, partners, self-employed individuals (for subsistence expenses only), and essential personnel involved in managing events.
Source: accounting.therisegroup.co.uk
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
