Company runs an outdoor sports adventure park (mountain biking, hiking etc) and regularly provides free entry to tour operators for marketing and promotional purposes - including an annual trade day attended by up to 50 tour operators.
Other than food and drink - on which input VAT recovery is blocked - there are no other bought-in costs relating to these free admissions, which typically account for 4% of all admissions during any given year.
Could HMRC argue though input VAT on 4% of total overheads should be blocked on the basis that the free entry falls under the business entertainment rules? Or could it be argued that it's allowable marketing/advertising expenditure?
Alternatively, could HMRC argue that the free entries are non-business, and seek an input VAT restriction from that angle?
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