Reclaiming Input Tax on Director Entertainment

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The general rule is that if the entertainment is provided only for directors (or partners) of a business the VAT incurred is not input tax. This is because the goods or services are not deemed used for a business purpose. The VAT therefore cannot be reclaimed on the VAT return.

However, where directors and partners attend staff parties together with other employees, HMRC accept that the tax is input tax and this is allowed to be reclaimed.

As with all of our tax tips and web pages this information is necessarily summarised and of a general nature.  If you would like detailed specific advice please contact us.