VAT & business entertainment
A recent ECJ court case may have created an opportunity for UK businesses to recoover input tax incurred on entertaining overseas customers. Currently recovery of this VAT is blocked. Businesses that have incurred relevnt expenditure are encouraged to submit a claim to HMRC as soon aspossible to protect their position. This will ensure that if and when HMRC confirm that they will allow recovery of such input VAT that businesses are able to secure their full entitlement.
In order to submit a protective claim, businesses should hold supporting evidence and include the following information:
– Details of the overseas clients (entertaining of overseas suppliers is not covered)
– The type of expenditure
– The amount of VAT claimed
– Evidence to support the fact that the VAT had not previously been deducted
This decision does not have any impact on the domestic UK block on VAT or tax relief for business entertainment.