Get the VAT back on clothing

So you have to spend heavily on staff clothing. Golf club gossip says you can claim the VAT back. Is this so? What conditions apply to a successful claim?


Business expense HMRC says VAT incurred on uniforms or protective clothing can be claimed as input tax because it is a business expense.


The wig, gown and bands a barrister is required to wear in court are considered to be a uniform and the VAT incurred is therefore claimable as input tax.


Proving it's a business expense This can be tricky. A VAT Tribunal dismissed the taxpayer's argument that an art consultant required a high dress standard "to create a professional image."


The provision of clothing is normally a personal responsibility. A claim that business reasons require a high standard of dress does not justify allowing the VAT incurred to be claimed as input tax.


In another VAT Tribunal case it was stated "to dress well in order to conform with the standards of a particular lifestyle" was not a business expense.


Rock on! A classic case involved a musician who claimed the VAT back on a wig! HMRC paid him a visit (enough to raise anybody's follicles) and disallowed the VAT. He claimed the wig was needed to maintain his image as a musician. Photographs, posters, record and cd covers, press releases, and artwork (on which his business relied) would all need reprinting if his appearance changed.


He appealed to the VAT Tribunal who decided the wig had indeed been purchased for the purpose of his business and he could reclaim the VAT.


The  VAT on clothing used solely as stage costumes is reclaimable. Ordinary clothing worn by an entertainer or celebrity will usually be worn privately as well in which case the VAT is NOT reclaimable.


Treat it as a gift Use the business gift rules to claim back the VAT on "perk" clothing (neither uniforms nor protective clothing). Perks are an accepted business expense so if you provide your staff with clothing the VAT incurred is a business expense. However, if the clothes cost more than £50 in any twelve-month period, you will have to account for output VAT on their value. Make sure the clothes are worth less than £50 excluding VAT.