Please help refresh my memory - I used to know the technical answer to this and which part of the VAT act addressed this, but now it eludes me!

When stock is used in the business - how is VAT accounted for? E.g. Winery produces wine, wine gets used in tastings. So basically stock intended for selling is expensed. Best value I think will be to move from stock to expense at cost but what is the VAT implication?

So there's not a change in use - it's not going to used privately - it's used to generate taxable income as e.g. marketing expenses.

What I've seen is two ways:
1. Customer account used and stock is booked out e.g. on an account called "Proewyn" or Tasting Wine at selling price with VAT and then moved on a monthly basis to expense "Marketing" and VAT is claimed again as input => VAT effect = 0 (My concern here is what valid tax invoice do we have here to base input VAT claim on?)
2. Also customer account but stock is booked out at selling price with no VAT and then the total journal to expense on a monthly basis - stock movement is accounted for and no VAT taken into account neither output nor input

Any guidance would be appreciated!!