The VAT recovery position of caterers will ultimately depend on the liability of the supply made. Where the supply made is taxable either at the zero or standard-rate, VAT recovery will be normally be available on costs incurred. Where an exempt supply is made, VAT recovery will generally be unavailable unless it falls within the partial exemption de minimis limits (see V3.465). For a full discussion of VAT recovery, see Division V3.4. For the liability of caterer's supplies, see V6.178.
VAT recovery on catering supplies to employees
As described at V6.178, VAT may or may not be due on the provision of catering to employees. Irrespective of whether VAT is chargeable, the provision of food and drink to staff is a taxable supply with the result that VAT on related costs is recoverable (see V3.446 for discussion).
VAT recovery on free catering for customers and friends
Free meals or drinks provided for customers or friends are likely to be classed as business entertainment and input tax incurred on such supplies is
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