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VAT on branding at customer hospitality event

VAT on branding at customer hospitality event


I have a situation where the company I work for is holding a corporate golf event where customers are being entertained. Now I'm aware the event costs and food drink etc are disallowable from a VAT perspective, however there will be a large amount of cost incurred in branding the event with banners and advertising boards etc. Is this branding element of the event allowable from a VAT perspective or due to it all being incurred in the course of customer entertainment, is it actually classed as customer entertainment and therefore disallowable.

Any help on this matter appreciated as I'm unsure how far the "customer entertaining" element of the VAT rules extend as the customer is receiving no benefit.




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03rd Oct 2011 11:02

The starting place...

... the way to tackle these things is first to imagine that the entertainment provisions don't apply.  If all the costs would then be allowable under general "wholly and exclusively" principles, then it is only necessary to disallow those "expenses incurred in providing entertainment".

Entertainment is further then defined as "including hospitality of any kind" and "anything incidental to the provision of entertainment".

The italicised quotes above are taken directly from S.45 ITTOIA 2005 and the CTA provisions are very similar, if not exactly the same.  There is also similar wording in the VAT Input Tax blocking order.

In the case of a corporate event such as you describe, the purpose of the event is to promote the business and it is the entertainment that is incidental to that, rather than the other way round.  The expenditure for such an event would also be regarded as incurred wholly and exclusively for the purposes of the business.

I would normally look to allow all costs of holding such an event, other than those pertaining directly to the entertaining elements; food, drink, round of golf, etc.  If any venue costs are incurred you need to consider whether they attach themselves to the event as a whole (which I would then consider allowable) or are incurred in the course of providing the entertainment (and falling to be disallowed).

Any gifts to the attendees (eg tees, balls, etc) should satisfy the exception applicable to business gifts (conspicuous advert, cost <£50, not food, drink or tobacco), in order to be allowable.  (NB the not, food, drink or tobacco restriction does not apply for VAT purposes).

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to Kent accountant
03rd Oct 2011 11:08

Thanks George, this helps clear this up for me

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