Can you claim VAT on entertaining clients & employees?

entertaining blog header

Entertaining clients or employees can be tricky when it comes to claiming VAT!

In this blog, we’re going to explore the VAT rules around entertainment expenses and provide helpful tips to ensure you’re not overpaying tax.

When entertaining clients…

As a general rule, entertaining clients, customers, or third parties doesn’t qualify for VAT claims. However, entertaining employees, including directors and management, allows for VAT claims.

Pensioners, former employees, job applicants, interviewees, and non-employee shareholders are not considered employees.

When entertaining employees…

If you provide entertainment to reward employees, improve morale, or for other business purposes, you can claim input VAT.

Examples include staff parties, team-building exercises, and staff outings. Remember that a valid VAT invoice or receipt is required to claim input VAT.  For more information on what qualifies as a VAT receipt take a look at my previous blog – What is a VAT receipt and why do I need one?

Note that if entertainment is only provided to directors or partners, it’s not seen as being for business purposes, and input VAT cannot be claimed. Therefore, other employees must be invited and provided with entertainment.

Lastly, the VAT element of client entertainment cannot be claimed, regardless of the person’s status. Only employee-related entertainment qualifies for VAT claims.

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