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Tax and VAT Treatment of Travel, Entertainment and Staff Expenses


Finance team members who need to have a working understanding of both the VAT and Tax treatment of staff expenses. Anyone working in practice with a responsibility for advising on or auditing staff expenses. Delegates who are new to VAT may like to attend VAT Part 1 or VAT for Accounts Payable as an introduction to VAT before attending this course. 


Learning Objectives

Recovering VAT incorrectly can be costly. Over recovery is penalised by HMRC and under recovery can impact on profit margins. There are a number of issues regarding the recovery of VAT on staff expenses:

  • Has VAT been correctly charged?
  • Is sufficient evidence held?
  • Is the cost one on which VAT is non-recoverable?
  • What is the difference in VAT terms between staff and business entertaining?
  • Invoices are addressed to employees so can the VAT still be claimed.
  • The cost is non-deductible for direct tax so can VAT be claimed.

The last bullet point above highlights a common problem and dilemma as the rules for direct tax can differ from the VAT rules although there are areas where the rules are the same. The unique benefit of this course is that delegates will not only be guided through the complex VAT rules but in addition guidance will be given on the direct tax issues. The two presenters will highlight where the rules differ and offer practical guidance.

Course Content

  • An overview of VAT as it applies to staff expenses
  • An overview of the rules for income tax and National Insurance
  • VAT and income tax rules on travel and subsistence
  • VAT and income tax rules on business and staff entertaining
  • VAT treatment of various staff costs
  • Income tax treatment of common expenses
  • Tax relief by deduction or exemption
  • Evidence required for VAT and income tax deduction
  • Changes to the reporting of expenses and benefits in kind and the new general exemption replacing P11D dispensations from April 2016
  • Using PSAs to deal with taxable expenses and benefits where the Employer wants to pay the tax liability
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