Expenses question

[TonyF]

I believe its up to you, though - most clients won't want to be charged VAT twice - and if they're asking for receipt evidence, it'll be fairly clear they're being charged twice.

They aren't being charged twice. They are being charged VAT on the services your company provides at whatever rate you choose to charge. There is no such concept of paying VAT on VAT.

[Spikeh]

Don't care what HMRC appear to think, you have to apply VAT to any invoiced items. It's up to you (and to some extent your client) how much you actually charge for the item and if you want to faff around taking off the VAT percentage then that's your decision. But it is not necessary, nor is there any question of VAT on VAT. The net recovery of VAT incurred is the same either way.

These are business expenses, not disbursements.

Last time I checked, (£100 + 20%) + 20% is more than £100 + 20%. HMRC therefore recover more VAT in the long run - albeit from different companies.

[TonyF]

Most of us contractors won't be on a flat rate scheme any more due to changes that were introduced last year, so the only people you're helping by charging your client input VAT + output VAT is HMRC.

That is also incorrect.

[Spikeh]

No they don't - they rightly explain that unless the payment is a disbursement then it is a matter of contract law and nothing to do with them.

I incur £12 car parking fee, including VAT. I could recharge that to the client at £10 + VAT, £12 + VAT, £100 + VAT, £1 + VAT or not bother billing the expense to the client. It i nothing to do with HMRC apart from if you are charging VAT (on whatever amount) the right sum needs to be paid to them.

I just rang them again. The last person I spoke to gave me the wrong advice it seems - you are indeed correct; whatever the input cost is, I should always charge input cost (including VAT or any other taxes) + VAT.

Apologies - I was given the wrong advice by both HMRC AND my accountant - or I've just completely misunderstood what they've said!