A recent European Court ruling means that businesses with canteens may now be able to claim back the VAT incurred on the catering, according to Grant Thornton. The case centred on the attempts of two businesses, Danfoss and AstraZeneca, to reclaim VAT on catering expenditure where they had provided food free of charge during meetings attended by both clients and staff. The food had been prepared in the canteen and eaten on the business premises. The decision means that where meals are provided free in company canteens to business contacts in the course of meetings, the meals are for business related purposes and the VAT is recoverable. Similarly, the VAT incurred on catering provided to employees will also be recoverable where it was provided to ensure that work meetings do not have to be interrupted. Karen Robb, VAT partner at Grant Thornton, said: 'This ruling is significant for businesses that have not claimed VAT on the provision of this type of catering to clients and employees in the past, and such claims will now be possible.' She added: 'It will be interesting to see how HM Revenue & Customs responds to the decision because it would be unfair if it only applies to businesses with onsite canteens. VAT should, in principle, also be reclaimable where food is delivered to business premises or indeed consumed off site, provided that the cost was incurred for business purposes. All businesses should therefore review their VAT recovery policy for client and employee catering to see if past claims can be made.'