Claiming Input VAT on Director meals

I am a director, can I claim VAT on my lunch?

Yes, as directors are classified as employees of the business (Notice 700/65 para 2.3) you can recover VAT on lunch.

But as always there a few pot holes down this road to be aware of:

  • Subsistence – A meal taken away from normal place of work on a business trip is allowable.
    (Notice 700 para 12.1.2)

As a guideline, a claim should not be a problem if the business meeting is at least five miles away from the main trading base.

So a meal ordered to your office for lunch is not allowable.

  • Business Purpose – You cannot recover the VAT on meals which are not taken for business purposes (Notice 700 para 12.1.2)

Unfortunately, keeping the director’s tummy full is not a business purpose.

 

  • Exclusive – If the entertainment is provided only for directors or partners of a business the VAT incurred is not input tax. This is because the goods or services are not used for a business purpose. The VAT cannot, therefore, be recovered (Notice 700/65 para 3.2)

Thus, if meal is ordered for director only and not for other staff as well, Input VAT cannot be claimed.

Conversely, VAT can be claimed for employee entertainment like Christmas party when all employees including directors can attend it. Also there is no monetary cap on it.

See also Neil Warren article mentioned below on a planning tip – a small charge for guests.

 

Thus in conclusion, it’s better to avoid claiming Input VAT on meals for directors, unless it can satisfy the above conditions, which in our opinion is a high threshold to cross.

 

Sources:

 

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