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HMRC are reviewing the input tax treatment of business entertainment provided to overseas clients, in the light of the recent European Court of Justice judgment in the joined case of Danfoss and AstraZeneca (Case-371/07) (see Business lunches).
Businesses may wish to consider the relevant time limits applying to potential claims and to submit claims, together with supporting evidence, to protect their position, says the Revenue, pending the statement of its position.
The department adds that firms should note that any claim would be confined to entertainment which is of a kind and on a scale that is reasonable.
Any claims submitted should include:
- Details of the overseas clients (overseas suppliers are not covered).
- Type of expenditure, e.g. meal, drinks, sporting event, etc.
- Amount of VAT claimed.
- Evidence to support the fact that the VAT had not previously been deducted.
HMRC say that they do not consider the decision has any implications for the input tax block on expenditure on entertaining UK business clients - nor does it have any impact on input tax that can be claimed on expenditure on meals and other entertainment provided to employees, which business can continue to claim subject to the normal rules.
