UK VAT legislation states that any VAT incurred on the entertainment of employees, for example the provision of; food, drink, accommodation, theatre-concert tickets, is done so wholly for a business purpose and is therefore recoverable subject to the normal rules. There are two exceptions to this legislation, however. If entertainment is provided solely for the benefit of director or partners it is not deemed to have been provided for a business purpose and therefore any VAT incurred is not available for reclaim. 

Further to this, any entertainment provided to non-employees, for example relatives of employees, will not be business entertainment for these purposes and therefore the recovery of input tax is blocked. When you're looking to recover VAT on your office Christmas party, it is advantageous to familarise yourself with the 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 free of charge.