Is every invoice treated as profit??

[nick1122]

Thanks for all the replies. I understand few things but still not very clear.

Say I paid £100 from my personal account for an expense. Then I claim it from my ltd company and that offsets each other. So far so good.

Now my company invoices the client for £100 + VAT. Client pays my company £120. Company pays VAT of £20 (little less as on flat rate) to HMRC. Now if the company has to pay £20 as Corp tax, isnt the company making a loss of £20?? Had I not incurred this expense, then my company would have been better off by £20? Or am I missing something here?

Thanks
Nick

[Underbase]

Thanks for all the replies. I understand few things but still not very clear.

Say I paid £100 from my personal account for an expense. Then I claim it from my ltd company and that offsets each other. So far so good.

Now my company invoices the client for £100 + VAT. Client pays my company £120. Company pays VAT of £20 (little less as on flat rate) to HMRC. Now if the company has to pay £20 as Corp tax, isnt the company making a loss of £20?? Had I not incurred this expense, then my company would have been better off by £20? Or am I missing something here?

Thanks
Nick

You are missing the fact that the company paid you £100, when you claimed the expense back. That "reduces" profit (and therefore CT tax) by £100, or £20 of tax. So it is net zero effect on the companies tax position (excluding the VAT amounts).

[nick1122]

You are missing the fact that the company paid you £100, when you claimed the expense back. That "reduces" profit (and therefore CT tax) by £100, or £20 of tax. So it is net zero effect on the companies tax position (excluding the VAT amounts).

Ah, I get it now (finally)!! I can now see that others have also tried to say the same thing. Thanks for the replies.