An order made under VATA 1994, s 25(7) provides that tax charged on any goods or services is excluded from credit1 if2:
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•ÌýÌýÌýÌý the tax is charged on:
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–ÌýÌýÌýÌý any goods or services supplied to a taxable person, or
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–ÌýÌýÌýÌý any goods imported by a taxable person, and
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•ÌýÌýÌýÌý the goods or services in question are used or to be used by the taxable person for the purposes of business entertainment
For HMRC's views on the restriction of credit for input tax in respect of business entertainment, see Notice 700/65.
Definition
Business entertainment means entertainment (including hospitality of any kind) provided by a taxable person in connection with a business carried on by him3. Entertainment is provided for a person if it is arranged with that person in mind4. 'Entertainment' and 'hospitality' bear their ordinary and natural meaning5 and are not inconsistent with an intention to secure a business advantage, such as encouraging
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