VAT not deductible

[Josvill2010]

Hi,

I was told today that the VAT for food and accomodation is a non deductible item

When we get expense claims from our EE's, we book the net cost on the invoice to PnL and separate the VAT, to claim the VAT.

If this is true, all the VAT for accomodation and lunches, would have to go to the accomodation G/L code for the gross. Is that right?
What is the reason for the VAT on food and accomotion to be non deductible in business?
Regards,
j

 

[DB74]

You have to eat and sleep anyway

 

[Josvill2010]

You have to eat and sleep anyway

But you also need stationary and computers, and you can deduct that
I take you book all as a cost to the business

 

[mandelbrot]

VAT on accommodation can be allowed in some instances.
http://www.revenue.ie/en/tax/vat/leaflets/conferences.html

VAT is never deductible on food / drink. I suppose partly because as DB74 says, everyone has to eat / drink, you don't eat and drink in the furtherance of business, you do it to stay alive... And partly because you could guarantee it would be the most abused deduction EVER. People would be claiming the VAT on their weekly groceris and all sorts!

 

[T McGibney]

And partly because you could guarantee it would be the most abused deduction EVER. People would be claiming the VAT on their weekly groceris and all sorts!

This seems to be the traditional Irish government/Revenue 'never give businesses an inch - they will only scam you' logic. Oddly enough, it doesn't seem to be shared by the corresponding authorities in other jurisdictions, most notably the UK, where VAT deductions can be claimed on business meals/accommodation.

The very limited Cowen-era concession on reclaiming VAT on conference-related accommodation only came about because the government were warned they were losing international conference trade to overseas locations where VAT reclaim or exemption applied.

But, hey, we'd much prefer to have the country full of mothballed hotels than risk the odd dellboy claiming VAT on his groceries.

 

[Josvill2010]

HI Mandelbrot/ DB74,

I appreciate both your answers.

I have checked with another colleague in the UK (I know it is not Ireland!), and they too separate their Hotel and food bills, in net and VAT to claim it back, as these costs are incurred in the normal running of the business.

I understand Mandelbrot point, this area would be opened to abuse and expensive dinners with 'family' might be put through, to get a 23% discount via VAT claim. In our case, all expenses are signed by the employee as and actual and necessary for the run of the business eg the EE would only claim this, when he is away from his normal place of work. Would that make any difference?

Another example I can think of, are Sales Managers, they incur in a lot of lunch expenses during the year. Does that mean the VAT becomes an expenses to the business? I m always insisting in getting VAT proper invoices, but what is the point then?
I know I have loads of question but I appeciate your thoughts on this

Regards,
j

 

[ClubMan]

Is there different treatment of "business" meals and normal sustenance in this context? I ask because our work expense forms list these separately and I always thought that VAT was reclaimable on the former. Or maybe it's a hangover from the original US based expense form and irrelevant here?

 

[Josvill2010]

This seems to be the traditional Irish government/Revenue 'never give businesses an inch - they will only scam you' logic. Oddly enough, it doesn't seem to be shared by the corresponding authorities in other jurisdictions, most notably the UK, where VAT deductions can be claimed on business meals/accommodation.

The very limited Cowen-era concession on reclaiming VAT on conference-related accommodation only came about when the government were afraid of losing international conference trade to overseas locations where VAT reclaim or exemption applied.

Just read your reply after submitting the below email.UK and Ireland are different with this regard. I take note of this.

From the Revenue point of view, is there any point in making our EE's in Ireland to submit a valid VAT invoice then. Will a Credit card receipt be enough with the expense claim, as the VAT cannot be claimed anyway?

I am always antagonising our EE's to submit proper VAT invoices, instead of credit cards receipts

I hope I dont annoy the moderator (or you) with all my questions
Many thanks,
j

 

[Josvill2010]

Is there different treatment of "business" meals and normal sustenance in this context? I ask because our work expense forms list these separately and I always thought that VAT was reclaimable on the former. Obviously open to abuse though!

I take the businesss meals is like client entertainment and therefore non deductible for Corporation tax purposes

 

[DB74]

Is there different treatment of "business" meals and normal sustenance in this context? I ask because our work expense forms list these separately and I always thought that VAT was reclaimable on the former. Or maybe it's a hangover from the original US based expense form and irrelevant here?

Not as far as I know

The 3 main business expenses that you cannot reclaim VAT on were always

1. Food
2. Accommodation
3. Petrol

Cars is the 4th but it's not an everyday expense

 

[mathepac]

... Will a Credit card receipt be enough with the expense claim, as the VAT cannot be claimed anyway?

I am always antagonising our EE's to submit proper VAT invoices, instead of credit cards receipts ...

Speaking from long experience as an employee of a number of large organisations -

• A credit card receipt has one single purpose, to reconcile the credit-card statement at the end of the billing period, highlighting potential fraudulent trans actions or un-posted charges
• An invoice or receipt for goods or services paid for outside of the central AP system, needs to be detailed enough to enable line items (incl VAT) to be posted to the relevant G/L accounts and for audit purposes

Give them EEs plenty of the auld antagonism, the feckers, they're lucky to have jobs and credit cards to go to.