Article 5 I1

Tax charged on any goods or services supplied to a taxable person, F1... or on any goods imported by a taxable person, is to be excluded from any credit under section F225 of the Act, where the goods or services in question are used or to be used by the taxable person for the purposes of business entertainment F3unless the entertainment is provided for an overseas customer of the taxable person and is of a kind and on a scale which is reasonable, having regard to all the circumstances.

Where, by reason of the operation of paragraph (1) above, a taxable person has claimed no input tax on F4... a supply of any services, tax shall be charged ... on a supply by him of the services in question, as if that supply were for a consideration equal to the excess of—

and accordingly shall not be charged unless there is such an excess.

For the purposes of this article, “business entertainment” means entertainment including hospitality of any kind provided by a taxable person in connection with a business carried on by him, but does not include the provision of any such entertainment for either or both—

unless the provision of entertainment for persons such as are mentioned in sub- paragraph (a) and (b) above is incidental to its provision for others.

For the purposes of this article “overseas customer”, in relation to a taxable person, means—