Commentary

700/65/12 Business entertainment

Part V8 HMRC Notices
Part V8 HMRC Notices | Commentary

700/65/12 Business entertainment

Part V8 HMRC Notices | Commentary

700/65/12
Business entertainment

February 2012

1 Introduction

1.1 What is this notice about?

This notice has been restructured and rewritten to improve readability. The changes are made to ensure the technical content is up to date and relevant.

It explains the treatment of VAT you are charged on business entertainment.

1.2 Why do I need to know about business entertainment?

Because you cannot recover input tax incurred on the provision of business entertainment expenses.

You can normally recover, as input tax, VAT incurred on goods or services used for a business purpose. However input tax incurred by you on the provision of business entertainment to UK business contacts and non-UK business contacts who are not customers is blocked from recovery under a special legal provision.

Business entertainment is not the same as employee entertainment which is explained in section 3.

Main narrative treatment—V3.446.

2 Business entertainment

2.1 What is “business entertainment”?

Entertainment is “business entertainment” when all of the following conditions are met—

  1.  

    —     entertainment is provided—see paragraph 2.2;

  2.  

    —     it is provided to persons who are not employees of your business—see paragraphs 2.3 to 2.4 and 3.3; and

  3.  

    —     it is provided free.

Business entertainment provided to “overseas customers” is not blocked – see paragraph 2.6.

Main narrative treatment—V3.446.

2.2 What is meant by “entertainment”?

Entertainment is defined as hospitality of any kind; the following are examples—

  1.  

    —     provision of food and drink;

  2.  

    —     provision of accommodation (such as in hotels);

  3.  

    —     provision of theatre and

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