Business entertainment expenditure & VAT reclaim

[ANDREW88]

I realise that input VAT cannot be reclaimed on business entertainment expenditure and that this includes hotels, food and drink costs, etc. However, I have two questions relating to this:

1. In the case of providing accommodation and meals to a contractor, which is essential for them to be able to fulfil their contractual duties for our company, can the VAT be reclaimed? They're not entertainment costs but rather "subsistence" costs, surely, so would be classed as input VAT?
2. What about a situation where two of the business' employees were, for example, meeting with another individual, who was not an employee of the business. As an example, these three were meeting to sample food or drinks that may be used as part of the business' activities? Would this count as a "business entertainment" cost or would it be classed as a necessary incurred cost to fulfil the business' activities and so VAT would be reclaimable?

I look forward to your clarifications. Thanks.

 

[lesvatadvice]

1. the expenditure is treated as subsistence; input tax can be claimed;
2. the provision of hospitality to a third party is business entertainment, and therefore input tax deductible. But, if the cost of the meals is included in a fee charged to the other business, then input tax is deductible. But this is a fine line!

 

[ANDREW88]

Thanks for your clarifications.

 

[lesvatadvice]

HMRC guidance on Business Entertainment is here: https://www.gov.uk/government/publications/vat-notice-70065-business-entertainment

 

[ANDREW88]

Thanks for that; I had seen that thread, but those two situations that I mentioned seemed unclear from having read that guidance.