Input tax is often claimed in error on the provision of business entertainment. This includes, for example, the provision of hospitality or entrance to theatres, concerts and sporting events, and similar expenditure.

Input tax cannot be claimed on business entertainment provided to anyone other than employees or overseas customers. While input tax may be recovered on the business entertainment of overseas customers, in many cases an equivalent output tax charge will arise.

Care should be taken when processing entertainment costs. For example, costs allocated to expense headings such as advertising or marketing are often overlooked, and the related VAT claimed in error.

Source: New feed