A verdict in the European Court of Justice has given UK businesses the opportunity to reclaim VAT on the costs of entertaining overseas customers.
A long time ago, businesses were allowed to reclaim VAT when they incurred costs entertaining overseas customers, but not when they entertained UK customers. Then Customs changed their approach and blocked the recovery of VAT on all entertaining of customers.
However, in the cases of Danfoss and AstraZeneca it has been decided that this change was disproportionate compared to the problem Customs were trying to solve, and that it may be ineffective as a result. This has opened the door for businesses to claim VAT back on the costs of entertaining overseas customers, and they can go back as far as 1 May 1997 - though a claim going back to then will have to be submitted by the end of this month. There's detail about what you actually need to do on the HMRC website.
Obviously, this verdict isn't going to be of a great deal of use to most UK businesses - by and large, where businesses do entertain customers they are likely to be from the UK. But for a few businesses it will be very good news.
Fizz provide a complete range of accounting and taxation services for SMEs, in Oxfordshire, Buckinghamshire and further afield. Visit us at www.fizzhq.com or call us on 01844 215682.
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