You cannot claim VAT that is incurred on the provision of business entertainment. However you can claim VAT for employee entertainment.
Entertainment is classed as ‘Business Entertainment’ when all of the following conditions are met:
- It is provided to persons who are not employees of your business. For the purposes of VAT an employee could be a person employed by you, a director or partner who is engaged in the management of business, a self-employed person who is treated by you in the same way as an employee. People who are not employees include pensioners or former employees, job applicants and interviewees and shareholders who are not employees.
- It is provided for free.
- Entertainment is provided. Entertainment is when any kind of hospitality is provided such as: provision of food, drink, accommodation, theatre & concert tickets, sporting events, entry to clubs or night clubs, the use of capital assets for the purpose of entertaining.
Employee Entertainment is defined as an employer providing entertainment for the benefit of employees to reward them for good work or to maintain and improve staff morale, so long as this is done so wholly for business purposes. VAT incurred on Employee Entertainment can be claimed on your VAT return, such as staff parties, staff outings or team building exercises.
If you wish to claim VAT on items that are both business entertainment and non-business entertainment you can claim the portion that is not business entertainment in your VAT return.
Should you have any questions concerning VAT and would like us to help with your VAT matters please do not hesitate to contact us.
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