VAT on entertaining - be very quick!

Posted by AccountingWEB PM | on Mon, 23/03/2009 - 05:04 5297 1 comment

HMRC has announced that the outcome of the joint Danfoss and Astrazeneca VAT decision by the European Court is under consideration, and that a further announcement will follow from the tax authority.

However, claimants may wish to make a claim to recovery of input tax wrongly blocked so that the maximum claim is possible.

Continued...

Confusion

Anonymous | Mon, 23/03/2009 - 14:16 | Permalink

The article on HMRC's web site appears to be confusing a number of different principles. The Danfoss/AstraZeneca situation only applies to input tax that wholly relates to business activities and is not classed as entertaining, e.g. a working lunch in the office. There appears to be no reason for the principle to be extended to business entertaining that takes place outside the office, even if it is for an overseas client.

The rules on business entertainment were changed in 1995 by HMRC on the basis that it brought us within the EU's rules which prohibited the recovery of such input tax. It doesn't seem possible for HMRC to now reverse that position and allow claims for business entertaining of overseas clients.