VAT and Business Entertainment
Generally, the VAT cannot be recovered on the business entertainment expenses. It makes no difference whether the person being entertained is an existing customer, a potential customer or any other person who is not an employee.
Business entertainment expenses include:
- Food and drink
- Accommodation – e.g. hotels
- Sporting events and facilities
- Theatre and concert tickets
- Business gifts
- Payment made to third party business entertainment organisers
- Free samples
- Use of capital assets for the purpose of entertaining.
You also cannot claim back the VAT when you provide entertainment or hospitality only for the directors, partners or sole proprietors of the business or when your employees act as hosts to non-employees.