Revenue and Customs Brief 44/10 outlines HMRC’s revised policy on the recovery of VAT incurred in entertaining ‘overseas customers’. The Brief confirms that such VAT is recoverable, essentially provided the ‘entertainment’ is ancillary to a core business activity such as a meeting, as opposed to forming part of corporate hospitality activity. The Brief does not provide a definition of the word ‘customer’ although it states this does not include ‘business contacts’. The implication is that the policy revision does not include target customers but rather existing customers who have purchased goods or services from the supplier. Business should consider whether they can file a retrospective VAT refund claim, and how they maximise refunds of such VAT going forward.
