This document discusses this in detail, together with its VAT treatment; entertaining overseas customers; corporate hospitality events; dual use; the exceptions; disposal of goods used for business entertainment; staff entertainment including the detail on who is and who isn't an employee.
This guidance note provides an overview of the VAT treatment of business entertainment expenses.SI 1992/3222, Article 5 (subscription sensitive); VATA 1994, s 25(7)
For a flowchart containing details of when VAT is recoverable on entertaining expenses, see Flowchart - claiming input VAT on entertaining expenses.
For a discussion of case law relating to this topic, see the Business and staff entertaining - relevant VAT case law guidance note.
What is business entertainment?
Entertainment is deemed to be business entertainment if all of the following conditions are satisfied: HMRC Notice 700/65; De Voil Indirect Tax Service V3.446 (subscription sensitive); VIT43200;2006/112/EC, Article 176; VATA 1994, s 84(4)(c)
- entertainment is provided to individuals who are not employees of the business
- it is provided completely free of charge
Please see below regarding the provision of entertainment to overseas customers.