UK & Overseas Entertainment, Overseas Travelling & Subsistence: Codes 7403-7406

These four codes round off the travel and entertainment block, and one of them carries a VAT catch worth knowing about: client entertainment is one of the few business costs where the VAT usually can't be reclaimed at all.

The codes, and what each one holds

Code 7403 — U.K. Entertainment records the cost of entertaining clients or contacts within the UK, such as a business meal.

Code 7404 — Overseas Entertainment covers the same kind of cost incurred abroad.

Code 7405 — Overseas Travelling records travel costs specifically for trips outside the UK.

Code 7406 — Subsistence covers reasonable meal and incidental costs for employees travelling on business, distinct from entertaining a client. All four are Overheads codes and normally carry a debit balance.

A worked example

Say a sales director takes a client to dinner in London for £180, flies to a trade fair in Germany at a cost of £310, and claims £25 for meals while travelling alone on a UK site visit.

U.K. Entertainment (code 7403): £180 debited — and, importantly, the VAT on this bill is not reclaimable, since HMRC doesn't allow input VAT recovery on client entertainment.

Overseas Travelling (code 7405): £310 debited for the flight.

Subsistence (code 7406): £25 debited — this is a genuine employee expense, not client entertainment, so its VAT treatment differs.

Why this matters day to day

Confusing entertainment with subsistence is a common and costly mistake, since one is a genuine, VAT-reclaimable staff expense and the other almost always isn't — getting this wrong on a VAT return is exactly the kind of error HMRC checks for. Splitting UK from overseas costs also matters for expense policy and budgeting, since overseas trips typically carry a different cost profile and approval process than domestic ones.