 Food provided during directors’ meetings
A recent decision of the European Court of Justice (ECJ) in a Danish case (Danfoss & AstraZeneca) suggests that HMRC has been too strict in disallowing all VAT on food provided to directors where no clients or other employees are present. The Danfoss case indicates that where the food is provided during a business meeting in order to prevent the meeting being interrupted by the needs of its participants to eat, then the provision of that food is for a business purpose and the VAT can be recovered (unless there is a lawful block in place). UK law has no block on food provided to directors.
It is unlikely that HMRC will see this decision as extending to food provided to directors outside the meeting room or for which the meeting was interrupted. Nevertheless, for some businesses there might be sufficient VAT at stake on meals during directors’ meetings – particularly as claims can (before 31 March 2009) be lodged back to 1973 – to make lodging a claim with HMRC worthwhile.
There has been some speculation that the Danfoss judgement might mean that HMRC will have to repay UK businesses the VAT incurred on providing meals during business meetings to business contacts and clients. This does not seem likely as currently such VAT is blocked from recovery in the UK under a rule authorised in European law.
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