After a recent European case, HM Revenue & Customs have changed their mind whether input VAT can be reclaimed on entertaining overseas customers. In 1988 UK law was changed to stop businesses reclaiming VAT on entertaining overseas customers. In light of the recent case HM Revenue & Customs have now concluded that they need to change the law back to be consistent with European Law.
The Government intend to change the law to allow VAT to be reclaimed on entertaining overseas customers. In the meantime HM Revenue & Customs will consider claims for past entertaining. The welcome change only affects entertaining overseas customers. It is still not possible to reclaim VAT for entertaining UK customers or overseas contacts who are not customers.
Extract taken from our 2011 Winter edition Tax newsletter – if you would like to subscribe please leave your details here.
Image taken from Blue Lagoon