Blocked business entertainment or recoverable input VAT?

VAT Question

My client is a business mentor who provides coaching services to businessmen and women. Their customers also subscribe to a membership club whereby they get to attend meetings and business conferences with likeminded business owners to exchange ideas. The membership package includes breakfast or lunch when attending these events, depending on the time of day these events are held. Is the input VAT my client incurs for providing these meals recoverable input VAT, or is it blocked business entertainment?

VAT Answer

This is an interesting question, and the VAT treatment depends on what the wording is in the membership package sold to the customer.

If the meals are available to every member and the breakfast or lunch is listed as included in their fee for the membership package and they must be itemised as such (so not just shown as saying the conference includes a free meal), then the cost of providing the meals would be part of the taxable supplies charged to the members, and in turn the VAT incurred in providing these meals would be recoverable input VAT.

However, if the meals are shown as free lunch for those attending the meetings or conferences, then HMRC would treat this as non-recoverable business entertainment.

These rules would also apply if your client met up with their customer in a coffee shop and bought them refreshments; HMRC would treat this as non-recoverable business entertainment as it is a free supply.

The only way for these refreshments to become a recoverable taxable supply would be if they were recharged on to the customer as a taxable, separately itemised line on an invoice after the meet up, and I don’t know of any business that would do that these days.

Related VAT Questions

Supply of E-Publications

My client has their own website on which they make sales of e-books, which are downloaded by customers worldwide. My client’s customers are consumers rather than businesses, and these e-books mee

Train Hire for the Purpose of Providing Santa Specials

My client is a historic railway. In previous years they have sold Santa Specials; however, this year a third-party company will organise and sell the Santa Specials to the end customers. My client

Evidence of Zero-Rate Building Services Regarding New Dwelling

My client is a DIY housebuilder and has engaged the services of a building contractor to build the house for them. The contractor is insisting that, in order for him to zero-rate his supplies to my

VAT on Baby Clothes

My client, who sells baby gifts and accessories, has just registered for VAT. Are these zero-rated supplies like children’s clothing? Items sold include baby sized towels, muslin cloths, blankets

Payroll for UK employees going to work overseas and offshore remote workers

We are frequently asked to advise on the Income Tax and National Insurance treatment of UK employees who are being sent to work overseas, and employees who will work remotely from an offshore locat

Supply and Installation of Window Blinds

My client supplies blinds for windows and back in 2021, supplied and installed some blinds to houses at a new housing development before the houses were complete.

Vantage Fee Protect Customer Testimonials

Having changed over to Vantage a couple of years ago we have been very satisfied with the service. Especially the claims handling and technical advice lines for both our firm and insured clients on employment and business legal matters. The webshop Vantage offer allows our clients to join and pay electronically. This positively impacts our bottom line and makes things simple and efficient for our clients.

Linda Giles Chartered Accountant

Real people, real results

Vantage Fee Protect provide market leading Tax Fee Protection
Insurance schemes through accountants.

Don’t be shy,
get in touch

Vantage Fee Protect provide market leading Tax Fee Protection
Insurance schemes through accountants.

"*" indicates required fields

This field is for validation purposes and should be left unchanged.