Rebilling meals

[Weatherman]

Hello

I occasionally work abroad for my client and when I do, I rebill them for my travel and meal expenses.

I've been adding VAT on top off all my expenses, but I've now been advised I should not add VAT to food items, lunch and dinner. I can't seem to find clear confirmation of this. Does anyone know if this is the case? I'd always understood to add VAT on top off all expenses.

[TheCoconutDog]

Hello

I occasionally work abroad for my client and when I do, I rebill them for my travel and meal expenses.

I've been adding VAT on top off all my expenses, but I've now been advised I should not add VAT to food items, lunch and dinner. I can't seem to find clear confirmation of this. Does anyone know if this is the case? I'd always understood to add VAT on top off all expenses.

Yep. Add the VAT. Whether you de-VAT before adding VAT seems to be a moot point.

[jamesbrown]

You're effectively selling your client a service, so VAT is added. More precisely, insofar as your contract allows for billing expenses in a particular way (it apparently does), and the services are subject to UK VAT (i.e. not outside of the scope of UK VAT), and the expenses do not involve a disbursement (they don't), then the expenses should be billed with VAT added. Incidentally, it's best to do this with a separate invoice.

[tractor]

...

You're effectively selling your client a service, so VAT is added. More precisely, insofar as your contract allows for billing expenses in a particular way (it apparently does), and the services are subject to UK VAT (i.e. not outside of the scope of UK VAT), and the expenses do not involve a disbursement (they don't), then the expenses should be billed with VAT added. Incidentally, it's best to do this with a separate invoice.

But whether you can reclaim the VAT is subject to other rules too, so be aware that just because you charge it, does not mean you automatically reclaim it.

[TheCoconutDog]

Incidentally, it's best to do this with a separate invoice.

What's the reasoning here?

[Kenny@MyAccountantFriend]

HMRC guidance on the VAT treatment can be found here.

https://www.gov.uk/vat-costs-or-disb...d-to-customers

[Weatherman]

But whether you can reclaim the VAT is subject to other rules too, so be aware that just because you charge it, does not mean you automatically reclaim it.

Thanks. I'm on FRS, so HMRC will take VAT on the gross - I don't want to be left out of pocket, one of the reasons I was adding it in the first place

[jamesbrown]

What's the reasoning here?

Personal experience, nothing clever, and the contract may dictate how expenses are invoiced. I've never had a problem invoicing expenses separately. In contrast, if there's any argument about expenses, it shouldn't hold-up payment of the separate invoice for work completed. TBH, I'd prefer to have expenses factored into the rate or fixed price, but it doesn't always make sense with overseas clients.

[northernladuk]

Erm, aren't you just billing them, not re-billing?

[ceebeepps]

Sounds like "re-charging" is what was meant by rebilling, but "Vat on Vat" is pretty standard practice for professional services firms. It can be on the same invoice as services or separate. The individuals VAT scheme dictates the intricacies.

https://www.gov.uk/vat-costs-or-disb...d-to-customers

I personally would use to my accountant to advise me because that is ultimately what I pay for them for.