VAT & Expenses/Allowances

[Ted]

Hi,

I'm doing my first set of VAT Returns and have got a few queries on them.

Firstly, the background. The company I contract into (Company A) has in turn got a contract with another separate company (Company B). I was sent to work on their site (Company B) for a period of time and incurred expenses whilst doing this. These expenses were filed from my company into Company A. They provided a daily allowance which formed part of the expenses. The expenses covers travel and this daily allowance and this is what Company A paid out against.

However, I've got receipts to show what I paid for on a daily basis whilst onsite at Company B.

Currently in my draft VAT return I've got the allowance and the travel listed - as these were what were expensed and therefore what the VAT is against.

However, I need to put an expense claim in from myself into my company in order to complete the sequence. I don't think that the actual receipts need to form part of the VAT - as that would essentially be claiming for unpaid VAT.

I believe that the receipts are needed to show mow much of the daily allowance is actually expenses and how much actually goes against profits (as the expense never exceeded the daily allowance).

1. Am I correct in thinking that only the Allowance and travel can be itemised on the VAT return (as that is what the Expense claim contained)

2. Where do I make use of the meal receipts etc. I'm pretty sure I need to get these pushed into the company. But do they form part of any VAT returns at this stage?

Can anyone give me some info on how this should work?


Thanks.

[northernladuk]

Why isn't your accountant doing this for you?

[TheCyclingProgrammer]

Firstly what you term as expenses claimed from Company A are just recharged on your invoice like anything else. So if they agreed a daily allowance of £x then you invoice them for £x x days plus VAT. This goes on your VAT return as sales and output VAT.

What you claim back from YourCo should be your actual costs incurred (unless you're using flat rates for expenses), backed up by a receipt. Assuming these are tax deductible and covered by exemptions (as most valid travel and subsistence expenses are) then YourCo reimburses you for these costs tax free and without needing to report them on a P11D.

If you're on the standard VAT scheme, you only reimburse yourself for actual costs and you have a valid VAT receipt then YourCo can claim the input VAT on these expenses on its VAT return.

https://www.gov.uk/reclaim-vat/staff-travel

If you're on the flat rate VAT scheme there is no VAT to recover and the cost of YourCo reimbursing you for your expenses will not appear on your VAT return.

Example: client co allows you to invoice them for expenses at a flat rate of £25/day. You have 4 days travel so you invoice them for £100 + VAT. That's £20 of output VAT on your return.

Your actual costs incurred in that time were £96 including VAT (I'm assuming all the expenses had a VAT element). You claim £96 back from YourCo and YourCo can claim the £16 VAT on its VAT return.

End result:
You get your £96 back.
YourCo owes the VAT man £4 in VAT.
YourCo is left with £4 profit from billing the client at the contractual flat rate allowance.

[stek]

Are you on FRS?

Have you got an accountant, TBH, if you haven't, and you are on here asking, you need one, and we're not going to proxy ours so pay for your own.

As quickly as possible because you are out of your depth here....

[SueEllen]

Are you on FRS?

Have you got an accountant, TBH, if you haven't, and you are on here asking, you need one, and we're not going to proxy ours so pay for your own.

As quickly as possible because you are out of your depth here....

Asking your accountant this time is partially the wrong answer this time as even if you have an accountant you are advised by the VAT people to understand how VAT is calculated in case your accountant screws up.

HMRC use to run courses you could attend but now it's all online here linky

[kaiser78]

Asking your accountant this time is partially the wrong answer this time as even if you have an accountant you are advised by the VAT people to understand how VAT is calculated in case your accountant screws up.

HMRC use to run courses you could attend but now it's all online here linky

This is OP's first set of VAT returns, so surely they should be checking in with the accountant as the first port of call ?

[SueEllen]

This is OP's first set of VAT returns, so surely they should be checking in with the accountant as the first port of call ?

Nope.

Did mine myself with guidance from a real person. Then went on a VAT course.

[kaiser78]

Nope.

Did mine myself with guidance from a real person. Then went on a VAT course.

Not sure what you class as a real person. Different approaches, but VAT course not for me thank you very much

[TheCyclingProgrammer]

Until you start dealing with overseas transactions or some of the other more arcane rules of VAT, *generally speaking* VAT is fairly simple. If you're on the FRS its even simpler. So I agree with SueEllen, even you should probably be asking your accountant questions you should also be trying to get your head around this yourself. Basic VAT is not rocket science.

[Lance]

Are you on FRS?

Have you got an accountant, TBH, if you haven't, and you are on here asking, you need one, and we're not going to proxy ours so pay for your own.

As quickly as possible because you are out of your depth here....

Unusually I agree with NLUK and Stek with what appear to be quite offhand and unhelpful comments.
But in this case you are a long way from understanding what you need, and haven't provided enough information for a correct answer.

You almost certainly should be on FRS anyway and that makes things simpler. But if you don't even know how to recharge expenses to your client then you've started down the wrong path already.
If you don't have an accountant get one, if you do then talk to him/her.