To meet the criteria for business entertainment, the expense must have been:
- Not provided to an employee of the business
- Provided free of charge to the recipient
- A legitimate expense for the business (e.g. entertaining clients)
Expenses that are considered to be business entertainment:
- Food and drink
- Theatre and concert tickets
- Sporting events and facilities
- Entrance to clubs and nightclubs
- Use of capital assets such as aircrafts and yachts for entertaining
- Gifts that do not meet the criteria
Entertainment is not a tax-deductible expense but should still be recorded as a business expense.
If you paid for the expense personally, you will want to record it so your business can reimburse you. If you paid for the expense through the company bank account, you need to record the expense so you can account for why the money left the company bank account.
VAT cannot be reclaimed on this expense.