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Retirement gift

17 September 2013
Issue: 4420 / Categories: Forum & Feedback , VAT

An employer anticipates buying gifts for several employees who are approaching retirement. Will the firm be able to recover the input VAT incurred and is there any VAT chargeable on the gift? Is this a business supply?

My client is a reasonably large company which has built up a workforce of several hundred employees over the years. Many of these have reached or will soon reach retirement age and the firm would like to mark their cessation of employment with a gift.

It has been suggested to me that the firm would be happy to spend in the region of £250 for a retirement gift for each employee. However because the client is anticipating having to purchase quite a few gifts each year they have also asked what the VAT implications would be.

I can’t seem to decide whether this is a business supply or not. There is no obligation on the firm to make the gift so does it relate to the business or is it made at the personal whim of the directors?

Can the firm recover the VAT element...

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