VAT Recovery on Business Entertainment

Input VAT incurred on the entertainment of employees, for example the provision of food, drink, accommodation or theatre/concert tickets, is wholly recoverable if provided for the sole benefit of the businesses employees.  This assumes that the employer is ordinarily entitled to recover all of the VAT that it incurs on expenditure.


There are, however, two exceptions to the above general rule in which input VAT recovery would be blocked. If entertainment is provided solely for the benefit of directors or partners it is not deemed to have been provided for a business purpose and therefore any VAT incurred is not recoverable. Furthermore, any entertainment provided to non-employees, for example relatives of employees or clients/suppliers, is subject to a specific input tax block.


When you’re looking to recover VAT on your office Christmas party, it is advantageous to familiarise yourself with these rules. If you are unsure whether entertainment paid for by the business can be classed as for a business purpose please discuss your query with one of our consultants on our free VAT helpline.

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