19-006 Introduction to luxury, amusement or entertainment
Subject to the normal rules (e.g they must have a VAT invoice and be making taxable supplies etc), a VAT registered business is entitled to recover VAT incurred on expenditure arising in the course or furtherance of business. However, there is a specific input tax block which prevents VAT incurred on ‘business entertainment’ being recovered.
When considering expenditure on, for example, meals, hotel accommodation etc the basic position is that input tax is claimable according to the status of the recipient as follows:
1Employees: VAT incurred on staff entertainment is claimable, provided the entertainment is for the benefit of the employee (ie they are not acting as hosts);