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Vat help

VAT inspector has said we cannot claim VAT on Xmas party or any expenses?

Xmas party HMRC website reads to me you can claim £150 per person including VAT?

am I misreading this?

expenses please advise and what about petty cash I would have thought expenses and petty cash
would be trated the same

any views would be appreciated

many thanks

Comments

  • totleybladetotleyblade Feels At Home Registered Posts: 48
    Hi Yves,
    I think the VAT inspector is probably correct in regards to the Christmas party. The £150.00 per person
    relates to the limit of the allowance claimable against corporation tax. As it is 'entertainment', (unlike our office part which is a pain!), for vat purposes I would say no vat is reclaimable. As regards 'expenses' it depends. So long as they are genuine business expenses backed up with receipts and just purchased via the petty cash for convenience or because they are low value I think these would be allowable for reclaiming the VAT. If the boss is trying to pay for his own entertainment or perhaps his household bills for example via the petty cash, then the VAT should not be claimable on those items.
  • T.C.T.C. Experienced Mentor Registered, Tutor Posts: 1,448
    Limit for tax is £150 per person including VAT, but that is not saying that the VAT is re-claimable.
  • yvesyves Feels At Home Registered Posts: 28
    Thankyou all for your replies

    are you saying TC that I should be entering the purchase invoice as Gross for the Xmas Party not reclaimimg the VAT at all and allowing £150 per employee for corporation tax purposes

    I just want to clarify the correct procedure

    I have to say I read the HMRC site on Xmas parties I understood it to mean you could claim the VAT element per employee of the £150 being £25 VAT

    now I am not sure

    your thoughts would be welcome
  • readerreader Experienced Mentor MAAT, AAT Licensed Accountant Posts: 1,042
    yves wrote: »
    Thankyou all for your replies

    are you saying TC that I should be entering the purchase invoice as Gross for the Xmas Party not reclaimimg the VAT at all and allowing £150 per employee for corporation tax purposes

    I just want to clarify the correct procedure

    I have to say I read the HMRC site on Xmas parties I understood it to mean you could claim the VAT element per employee of the £150 being £25 VAT

    now I am not sure

    your thoughts would be welcome

    I think that you can recover as much input VAT as you want on staff entertainment as long as you have the VAT invoices to support your claim and you meet the following rules:

    "Where an employer provides entertainment for the benefit of employees for example to reward them for good work or to maintain and improve staff morale, it does so wholly for business purposes. Thus the VAT incurred on entertainment for employees for example staff parties, team building exercises, staff outings and similar events is input tax and is not blocked from recovery under the business entertainment rules. However, there are two exceptions to the general rule. These are where:
    entertainment is provided to directors, partners or sole proprietors of the business, see paragraph 3.2
    employees act as hosts to non-employees, see paragraph 3.3"

    http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageLibrary_ShowContent&propertyType=document&id=HMCE_CL_000092#P91_6610

    However only £150/head/year is allowable for corporation tax and the balance has to be added back on the corporation tax computation.
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