Recovering VAT on Sales Trips

A little extra time spent analysing your business expenses may mean you can to reclaim VAT which otherwise may not have thought you were entitled to.

In most cases you cannot claim the VAT on business entertainment  ie food, drink and hotel accommodation for staff and customers.  However, if you can prove that entertaining overseas customers has a strictly business purpose then the VAT incurred can be claimed back.

HMRC also allows the VAT to be reclaimed if the provision of entertainment is incidental in its provision of subsistence.  The test you have to apply is whether the cost is incurred as a business expense or entertainment. For example, if a salesman travels to meet a UK customer for a business meeting which means they are away from their normal place of work, then VAT pertaining to reasonable costs for their travel, hotel accommodation and meals can be reclaimed.  However, if they take the client out for lunch, only the VAT on their portion of the meal can be claimed as this can be counted as subsistence.  The portion of the meal which relates to the client is treated as purely entertainment and therefore the VAT cannot be reclaimed. 

What this means in practice is that expense claim forms need to detail the purpose of the meeting and who was present, but for some businesses it is well worth the extra effort.

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