Can any VAT be reclaimed when you take a client out to lunch?
Most readers are probably familiar with the general block on reclaiming VAT on costs associated with entertaining customers or suppliers. But are there any exceptions?
For tax purposes the rules are very simple. Whether you take a customer or supplier to the FA cup final at Wembley, or just out for lunch at the local Nandos, no tax relief can be claimed as it is classed as entertaining.
But what about VAT? There is also a block on recovering input VAT on customer and supplier entertaining, but only where that is the purpose of the expense. So, using the above example, if you take your best customers to watch the FA Cup final then this will be entertaining in the true sense and no VAT can be recovered.
However, if you (or one of your staff) visit a client for a business meeting, and then go out to lunch and pick up the tab, then it is possible to reclaim input VAT on the proportion of the bill relating to your meal (or that of any of your employees). So, if you and one of your team visit a client and then take one of the Directors out to lunch after the meeting, then you can recover two thirds of the input VAT for the proportion relating to the meals for yourself and your employee.
If you are reading this thinking you’ve missed out on claiming back input VAT in the past then good news – you can go back up to 4 years and claim it on you next VAT return (providing the VAT in question is less than £10,000).
Key Facts
- Input VAT cannot usually be recovered on customer or supplier entertainment
- If you have a meeting and then go out to lunch, this isn’t entertainment in the true sense
- In these cases you can reclaim the VAT on the proportion of the bill relating to your meal
- Apportioned VAT claims can go back up to 4 years and be claimed on your next VAT return
For further advice on this matter please contact me.
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