The VAT People logo
0161 477 6600

The VAT Implications of Works Christmas Parties

The VAT Implications of Works Christmas Parties

VAT

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.

Related posts

Place of supply of services

A case was recently heard by the Upper Tribunal relating to the place of supply of services made by the Appellant, Mandarin Consulting Ltd, who provided career coaching to students of Chinese origin.

D.I.Y Builders Scheme

Mr Smith, the Appellant in this instance, converted a barn adjoining his property into living accommodation for which planning permission was obtained. In 2007, when 60% of the work had been completed, Mr Smith became aware that he may be able to recover the VAT element of the costs incurred in the course of converting the barn by way of the DIY builder's scheme and a claim was subsequently submitted.

Input Tax Recovery - Intending Trader

The VAT recovery position of intending traders has formed the basis of several court decisions in recent times, and this was again addressed in the case of Hedge Fund Investment Management Ltd (“HFIML”), heard by the First-Tier Tribunal. HMRC had raised an assessment in relation to input tax recovered by the business, on the basis that there was no link to any taxable economic activity. Furthermore, a penalty assessment was raised in relation to the recovery of this input tax for careless behaviour.