VAT on expenses

[flash1969]

Newbie here, Ltd Company, VAT registered. Recently had to work late hours and took cab home. Cab cost had no VAT added, and I paid it.

I've invoiced this back to my client, but added VAT. Is this correct, found guidance online which implied yes. What have others done?

[Michael at BI Accountancy]

Hi,

Presuming you are on the flat rate scheme then yes, that would be correct to add VAT on top of the cost.

Doing this ensures that you are not left out of pocket when it comes to the VAT return.

You should really look at any expense incurred as part of the service you are providing.

[fidot]

Surely vat should be added irrespective of whether you are on the flat rate scheme

[mudskipper]

Surely vat should be added irrespective of whether you are on the flat rate scheme

Agreed - you are invoicing for yourCo's service and the expenses incurred in providing it. So if you're registered for VAT, VAT must be added.

It won't 'cost' your client any extra as they will reclaim the VAT.

[MrMarkyMark]

Agreed - you are invoicing for yourCo's service and the expenses incurred in providing it. So if you're registered for VAT, VAT must be added.

It won't 'cost' your client any extra as they will reclaim the VAT.

Not the case if they, the client, are in finance, or the insurance business to take a couple of examples?

[sal]

As already stated by others - if you are VAT registered you are obligated by law to add VAT in your invoice.

The caveat here is to align the amount with the Client. Some of them are refusing to pay more than what the original receipt shows, so you will have to recalculate your invoice to X including VAT, essentially taking a hit. But such is the cost of doing business sometimes.

[malvolio]

Not the case if they, the client, are in finance, or the insurance business to take a couple of examples?

Not your problem... You have to add VAT to your invoice.

However, it's up to you what you charge your client, so as sal says above, you can adjust your charges to cover the additional VAT cost if the option is not being paid at all.

[MrMarkyMark]

Not your problem... You have to add VAT to your invoice.

Errrmm....... Yeh, Thanks a lot Mal, I have only been doing this around 16 years .

I was actually just pointing out that not all clients can claim the VAT back, that was all.

[Maslins]

Surely vat should be added irrespective of whether you are on the flat rate scheme

This.

It's an area that does seem to cause a lot of confusion. Basically HMRC's attitude is that your company doesn't sell taxi journeys or train tickets, it sells your skills which are VATable. Therefore even if you bump up your invoice to a client because you incurred some costs which potentially didn't all have VAT on them, doesn't matter, you still charge VAT on the whole invoice.

I imagine part of the reason being that if not, as an example firms like us with a lot of clients on the flat rate scheme might attempt to argue that a lot of our fee was recharging for some of our non-VATable costs like insurance/travel (at overly inflated prices), so we could avoid charging VAT on large chunks of our sales to help clients who couldn't reclaim it.

[malvolio]

Errrmm....... Yeh, Thanks a lot Mal, I have only been doing this around 16 years .

I was actually just pointing out that not all clients can claim the VAT back, that was all.

You know that, I know that. I was talking to the OP, who probably doesn't.

Come to that, major companies who can't reclaim VAT don't lose out either - or do you think they don't simply pass the 20% on to their consumers...?