On the first day of Christmas, Lovewell Blake gave to me, a primer on Christmas VAT recovery.
In the spirit of the season here are a few pointers for recovery of VAT in relation to Christmas issues.
For VAT registered, fully taxable, businesses there are a range of festive VAT costs that are recoverable:
- The staff Christmas party where only staff attend and the party is to thank them for services rendered during the year.
- Costs of a drinks party for staff such as nibbles and wine/beer on the last day of work.
- Business gifts made to staff, for example long service awards, flowers, or other gifts under £50 per head/per annum (for example if you gift each employee a bottle of wine) These gifts can all be bought on one invoice.
- Business gifts to customers or suppliers under £50 per head/per annum. As an example you could gift your favourite VAT adviser a bottle of whisky and reclaim the VAT.
- Reward events that staff attend, such as a box at football match. This does not include clients or contacts.
- A gift of goods to a charity is zero rated. If you decide to donate five gold rings and a pear tree to your local charity auction no VAT would be due (although the tree is zero rated when purchased)
VAT cannot be claimed on:
- Costs incurred relating to non-staff attending a Christmas party, if you invite staff guests you need to split staff costs from non-staff.
- Business gifts costing more than £50 per head/per annum
- Accommodation or luxury items for sole use by directors of a limited company such as a yacht.
- Reward events for directors only, for example Wimbledon tickets.
If you have previously not claimed for the above then it may be possible to submit a claim for recoverable VAT incurred in the past four years. However, If a business has claimed back VAT incorrectly in the past four years, then it needs to repay it to HM Revenue and Customs.
If you have any questions on the above, or any VAT question please contact Rob Geary
or Liz Hill
who will be happy to help.