VAT Reclaiming

VAT Reclaiming

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 Evening

Just need some clarification into VAT and what arew allowed to be reclaimed when filing VAT returns.

Gift items were purchasedas advertising type and thank you for business incentives for some of my clients.  They consisted mainly of Alcohol i.e whisky, wine etc for numerous clients of mine. 

My question is as I had to pay VAT on these items initially am I able to submit them against my VAT return this quarter.  

Each gift box was clearly created to advertise my business to hopefully secure more project work this new year.  All invoices were raised that accompanied each parcel.

I have scoured the NET but no apparent answer

Can anyone shed any light on rules and regs in relation to this

Many Thanks

Stefan

Replies (2)

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By User deleted
06th Jan 2010 08:28

No input tax reclaim

You cannot reclaim input tax on alcohol purchased as gifts for your clients/customers/suppliers.

Further information can be found at http://www.hmrc.gov.uk/vat/managing/reclaiming/entertainment.htm#2

and in VAT Notice 700/65.

Incidentally, the expense is not allowable against tax in your business' computation either.

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Rebecca Benneyworth profile image
By Rebecca Benneyworth
06th Jan 2010 11:34

I differ

VAT can be recovered on business gifts (which is different to entertaining) which cost individually less than £50 per item and are not one of a series of gifts provided to customers. If you give business gifts more than once a year the total value given to each must not exceed £50.

As far as income and corporation tax is concerned, there is a specific bar on "food, drink or tobacco" so the net of VAT cost will be added back in the accounts when you calculate the tax. Here is the link to the guidance on Business Gifts. Note that the limit increased from £15 to £50 quite a few years ago.

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