# VAT not deductible



## Josvill2010 (13 Jan 2012)

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 (13 Jan 2012)

You have to eat and sleep anyway


----------



## Josvill2010 (13 Jan 2012)

DB74 said:


> 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 (13 Jan 2012)

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 (13 Jan 2012)

mandelbrot said:


> 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 (13 Jan 2012)

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 (13 Jan 2012)

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 (13 Jan 2012)

T McGibney said:


> 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 (13 Jan 2012)

ClubMan said:


> 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 (13 Jan 2012)

ClubMan said:


> 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 (13 Jan 2012)

Josvill2010 said:


> ...  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.


----------

