Client Entertainment + Other expenses

[Sally BFCA]

Input VAT is not reclaimable on business entertainment.

If the director entertains clients when the director has worked a late shift this would be a combination of subsistence (for the director) and business entertainment for the clients. The input VAT on the proportion of expense attributable to the director may be claimed, but not that of the clients.

For contractors registered on the Vat Flat Rate Scheme, no input VAT may be re-claimed, even though for tax purposes a claim for subsistence may well qualify.

For example

You take your recruitment consultant and client out for dinner to discuss terms and conditions of a proposed contract after an 8 hour shift.

The input VAT may be claimed on the cost of the entertainment for the director because it is combined subsistence and entertainment, but not for the business associates. The cost of the expense is not tax deductible.

I couldn't find anything in HMRC website re foreign clients, that's not to say it's not there, just their lack of search power.

[Maslins]

Was it REALLY purely work related?

Or

Did you just happen to suck ass and buy some drinks.

One is a claimable expense, the other isn't.

I don't think either is a claimable expense. Client entertaining is strictly disallowed. As Malvolio says, I do remember hearing there's some obscure thing like you can reclaim VAT if it's for foreign clients (check this...don't take my word for it), but that's more because HMRC legislation wasn't very well worded, rather than they specifically wanted to make it ok.

Re: the computer stuff, you can either treat it as you "selling" it to the company, in which case as said above it's up to you to decide what's a fair price (as obviously it's worth a little less than it was brand new). Bear in mind as you (who most likely personally isn't VAT registered) are selling it, you can't reclaim the VAT you paid, and don't recharge VAT to the Company, therefore even if the Company is VAT registered, the VAT paid on these items will be lost.

Or, I think you could get away with calling it a pre trading expense, ie that you bought it wholly & exclusively for use within the Company, you just hadn't set the Company up at that point. On that basis you can treat it as an expense of the Company as though you purchased on the first day of trading. As (in effect) the Company bought it, you can then reclaim the VAT.

[northernladuk]

Was it REALLY purely work related?

Or

Did you just happen to suck ass and buy some drinks.

One is a claimable expense, the other isn't.

If you are unsure is it really worth putting yourself at risk for a couple of rounds of drinks???

[malvolio]

And watch the VAT. As I recall, it's not reclaimable for the entertainment of UK clients, only foreign ones.

[Moscow Mule]

Hi,

I Would like to claim for the following:

- Went for a few drinks with the client after work and brought a couple of rounds.
- Just set-up company a couple of months back and would like to sell the following to my company (Laptop/Printer/Office Equipment) however I have no receipts

Do you think HMRC would have issues with this ?

1) http://www.hmrc.gov.uk/paye/exb/a-z/e/entertainment.htm

2) You need to give the company a receipt. You must charge market value for the cost of the items (not new unless you've just bought them).

[BiggieBig]

Hi,

I Would like to claim for the following:

- Went for a few drinks with the client after work and brought a couple of rounds.
- Just set-up company a couple of months back and would like to sell the following to my company (Laptop/Printer/Office Equipment) however I have no receipts

Do you think HMRC would have issues with this ?