Client wants to buy a couple of motorcross bikes (sells very expensive cars) to take clients out on as he has land and it's the sort of thing his clients love.
If his Co buys them and they are assets on the balance sheet - can we reclaim the VAT? Although their general purpose is for "entertaining", they are just vehicles, but not to be held in stock. (He is on second hand margin scheme). If in the future he happened to sell them we would charge full VAT at 20%.
What do people think?
Replies (3)
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VAT cannot be recovered on the cost of providing business entertainment. As a result VAT would not be chargeable on disposal. AIA and CAs cannot be claimed for items used only for business entertainment either.
It looks like 'entertainment or hospitailty' to me, and therefore input tax is not recoverable.
But the sale of those bikes is VAT exempt, since the input tax is not allowed.