How Do You Recover VAT On Foreign Client Entertainment (UK)?
• Understand the content and portent of the recent decision: • The Advocate General (an officer of the court who offers a preliminary opinion) has said that the Netherlands is not complying with European legislation. Up until recently, entertaining foreign clients were not thought to be VAT exempt. But the European Courts have now ruled that this is illegal, opening the floodgates to rebate claims against the tax man that could result in hundreds of millions of pounds leaving the Treasury at a time when it is critical to retain cash. Dutch law blocks VAT claims by reference to the “use” of the goods and services purchased, i.e. business entertaining. Instead the Advocate General suggests that any restriction should be based on the “nature” of the goods and services, e.g., food and drink. The final judgement will be relevant to the UK, as the UK law is written in the same way as the Dutch law, and an ECJ decision must be applied by all EU member states. • Be aware that while there is no
