Spring 2011 Newsletter Content Leading article... Anything up his sleeve? General tax... Relaxed association File under 'e' Research costs? Give early A tax on houses Pension changes Holiday entitlement EISy money VAT... 20:20 vision Horses for courses? Do it yourself That's entertainment All in the contract? Where am I? Law items... What's in a title? The privileged few Called to account Don't mince words

That's entertainment The taxman takes a dim view of 'entertaining'. There can be arguments about what's a proper business expense, and staff parties get special treatment, but the general rule has been there for years: no deduction for profits or for VAT for taking contacts out to lunch or to a show. People with long memories may remember that we used to be allowed to spend money on foreign customers, in order to encourage exports. But that was abolished in 1988. Now a case in the European Court has pointed out that UK rules which block VAT on genuine business expenses couldn't be tightened after we signed up to an EU Directive in 1978. That means that we should have been allowed to claim VAT – if not a corporation tax expense – on entertaining foreign customers all these years. HMRC have accepted this as a principle, but you can expect them to argue about the facts – they will only let you go back four years, and they will want evidence that there was a proper business purpose behind the expense. They don't think that a 'jolly' qualifies for any deduction at all. If you have foreign customers and you think you might be due a refund, we will be happy to advise you.