Claiming VAT on entertaining non-staff is usually not allowed, but there are certain times when you can do it.
The input VAT is usually not claimable on the costs of entertaining non-staff.
This rule also applies to staff whose role is to look after the guests and make sure they enjoy themselves.
It is possible, however, to claim the input tax on the costs of entertaining non-staff from overseas, but only if the costs are, for example, food served in a meeting.
The input tax on these meals is blocked if the meals are deemed to be too lavish.
This allowance for claiming expenses only applies to non-staff from overseas, not to non-staff from the UK.
Example:
You have a customer from Ouagadougou.
You invite them to come to the UK for a meeting, and while they are here you take them out to see a Formula 1 race.
What expenses can you claim VAT on?
The Formula 1 race would be viewed as excessive, and so the VAT would not be claimable.
You can claim the VAT on expenses incurred during the meeting, as long as it wasn’t excessive.
However, the refreshments during the meeting would be allowable, as long as it wasn’t overly lavish.
This means that if you had your meeting at the Ritz, you would not be allowed to claim the VAT on it.