Expenses Reimbursement from Client for Contract inside IR35

[northernladuk]

I'm with Mudskipper on this one, from the sounds of it at least some of your travel costs will be allowable still where they don't form 'ordinary commuting' i.e. home to work.

I agree and many of the guides back this up. Charging the client it becomes a valid business expense just as buying a server and charging them. It's not T&S.

[Cirrus]

The general principle of IR35 is you are really an employee so you are entitled to whatever an employee is. Money given to an employee to come to work or have lunches is taxable as a benefit-in-kind but travelling between locations is not taxed.

[skLondon]

Many thanks all for your comments. Based on these I have gone back to my accountant and explained him that the travel to another location is on a need basis as and when required by the client and not something i would do regularly. He seems to now agree that it is an allowable expense which shouldn't be taxed and has promised to revert back with more clarity.

[northernladuk]

Many thanks all for your comments. Based on these I have gone back to my accountant and explained him that the travel to another location is on a need basis as and when required by the client and not something i would do regularly. He seems to now agree that it is an allowable expense which shouldn't be taxed and has promised to revert back with more clarity.

This aside how happy are you with him? Is this one case of him not understanding new legislation or is it just another error in a long running saga? I am assume this guy isn't a contractor specialist as well?

[Lance]

You don't have to add VAT to the gross amount, whether you rebill gross or net is between you and client.

I'm pretty sure the only time you can do that is for a disbursement. And expenses are most certainly not a disbursement.

https://www.gov.uk/guidance/vat-cost...d-to-customers

The only time you don't charge VAT is if you're not registered, it's for a non VATable item (childrens' clothes and the like) or you're being paid cash

[Contreras]

You don't have to add VAT to the gross amount, whether you rebill gross or net is between you and client.

I'm pretty sure the only time you can do that is for a disbursement. And expenses are most certainly not a disbursement.

https://www.gov.uk/guidance/vat-cost...d-to-customers

What TCP really means is whether you rebill gross + VAT, or net +VAT, or anything else + VAT, is between you and client.

HMRC only care about the + VAT bit.

You're right that it's not a disbursement - it rarely is.

[TheCyclingProgrammer]

I'm pretty sure the only time you can do that is for a disbursement. And expenses are most certainly not a disbursement.

https://www.gov.uk/guidance/vat-cost...d-to-customers

The only time you don't charge VAT is if you're not registered, it's for a non VATable item (childrens' clothes and the like) or you're being paid cash

What Contreras said. You're right, it's not a disbursement, but what you re-charge (net) for your associates costs is up to you (or a matter of contractual agreement with the client). HMRC only care that you charge VAT on top, not the rate at which you recharge expenses.

On the subject of non-VATable items, if you've incurred a non-VATable cost and are re-charging it to your client, and it isn't a disbursement, then you should still be charging VAT as the re-charge is part of your fee.

[Lance]

What Contreras said. You're right, it's not a disbursement, but what you re-charge (net) for your associates costs is up to you (or a matter of contractual agreement with the client). HMRC only care that you charge VAT on top, not the rate at which you recharge expenses.

On the subject of non-VATable items, if you've incurred a non-VATable cost and are re-charging it to your client, and it isn't a disbursement, then you should still be charging VAT as the re-charge is part of your fee.

Gotcha. I thought the suggestion was that VAT was optional......