Advice Needed -Consultancy asking for expenses to claim them as their own

[Lance]

How, exactly, if they haven't incurred the expense? More going on here than meets the eye. I would be demanding precise answers from the agency...

by invoicing the client......

There's no legislation that says you have to have incurred expenses to reclaim them. You can make a profit on expense claims by claiming more than you incurred as well.

How you treat them in your own books is different though.
If you haven't incurred £300 that you have claimed from the client then that £300 goes straight into profit.

[vwdan]

Yeah, this is weird behaviour - the majority of my contracting has been with and via consultancies and I've never ever passed anything over that they weren't going to pay me.

At best, it sounds like they're ripping off their client but at worst, could be entering them as expenses as their own.

But, ultimately - your concern is you. If they fraudently claim VAT, or lie to their client this isn't really your issue. If you want to play nice, document the expenses you've incurred into an e-mail - and send it very explicitly with something along the lines of

"
Please find attached the details of the expenses MyCo Ltd has incurred while working on the project.

Please note, that these expenses have been claimed back and paid from MyCo Ltd directly, and the VAT has been reclaimed. As such, these are purely for your information.
"

[vwdan]

by invoicing the client......

There's no legislation that says you have to have incurred expenses to reclaim them. You can make a profit on expense claims by claiming more than you incurred as well.

How you treat them in your own books is different though.
If you haven't incurred £300 that you have claimed from the client then that £300 goes straight into profit.

To be fair, it's basically Fraud by false representation. I can't imagine many contracts allow you to claim expenses that didn't exist.

[Lance]

To be fair, it's basically Fraud by false representation. I can't imagine many contracts allow you to claim expenses that didn't exist.

It's up to the contract to state what, if any, evidence is required to support an expense claim.
Most clients want to see receipts.

Some clients are happy with covering the cost of what could have been claimed no matter what was paid. An example I have recently is paying for 2 business class return tickets for me and a colleague, using air miles and vouchers.
I then claimed the full price of premium economy for 2 people and made about £4k.

The consultancy in discussion here is not doing anything fraudulent. The expense was incurred, the consultancy are just keeping it to themselves. Morally it's just greedy. Legally it's fine (as long as accounted for correctly).

[KinooOrKinog]

Why not just tell them you don't have any expenses?

[vwdan]

The consultancy in discussion here is not doing anything fraudulent. The expense was incurred, the consultancy are just keeping it to themselves. Morally it's just greedy. Legally it's fine (as long as accounted for correctly).

How can you determine that? The expense was incurred by a third party, not the consultancy and they appear to be misrepresenting that,

It's up to the contract to state what, if any, evidence is required to support an expense claim.

The required evidence is immaterial - what's material is the basis of the claim.

[Lance]

How can you determine that? The expense was incurred by a third party, not the consultancy and they appear to be misrepresenting that,



The required evidence is immaterial - what's material is the basis of the claim.

let's be clear.... An 'expense' charged to a client, is simply a cost to the client. There is no special treatment (unless it's a disbursement which is a different kettle of fish).
One hour of my time that I charge to a client is no different to me charging my client for an overnight hotel. As far as the charge to the client is concerned it's the same. The same VAT rate everything. The hotel doesn't need to exist, I might have stayed at a pal's house.

An 'expense' in my companies books is a cost to my company. That doesn't include my time, but does include my hotel (assuming it exists). I claim the VAT back on the hotel and the hotel cost brings down the profit and reduces the CT.

Those 2 descriptions are totally independent and unrelated. Unless there is a contractual clause around providing evidence.

[vwdan]

let's be clear.... An 'expense' charged to a client, is simply a cost to the client. There is no special treatment (unless it's a disbursement which is a different kettle of fish).
One hour of my time that I charge to a client is no different to me charging my client for an overnight hotel. As far as the charge to the client is concerned it's the same. The same VAT rate everything. The hotel doesn't need to exist, I might have stayed at a pal's house.

An 'expense' in my companies books is a cost to my company. That doesn't include my time, but does include my hotel (assuming it exists). I claim the VAT back on the hotel and the hotel cost brings down the profit and reduces the CT.

Those 2 descriptions are totally independent and unrelated. Unless there is a contractual clause around providing evidence.

Yes, I'm not disputing that. What I'm saying is that it's fraud to knowingly charge somebody something you shouldn't. It's the business to business equivalent of putting in dodgy mileage claims or timesheets.

Now, of course, the contract between the two businesses may be sufficiently relaxed as to allow it but it feels unlikely. The consultancy here hasn't incurred any of these costs, yet they're going to invoice their own client for them (presumably) on the basis that they have.

I do accept it could be entirely above board, and like I said in my reply, I personally probably wouldn't really care as long as I'd covered myself - but it's an odd situation and not one I've ever personally come across.

[TheDogsNads]

Never had an agency ask what expenses my co had paid me. If you were paid a day rate plus expenses, that's different. It sounds like the agency and or consultancy are now trying to suggest your rate included claimable expenses from them?

Be very careful here.

Just tell them your rate did not include any expenses element, you didnt claim any expenses via them and neither do you intend doing so.

Make very clear your co covered your expenses. These 'expenses' were not part of your day rate and have nothing to do with them.

[Lance]

Yes, I'm not disputing that. What I'm saying is that it's fraud to knowingly charge somebody something you shouldn't. It's the business to business equivalent of putting in dodgy mileage claims or timesheets.

Now, of course, the contract between the two businesses may be sufficiently relaxed as to allow it but it feels unlikely. The consultancy here hasn't incurred any of these costs, yet they're going to invoice their own client for them (presumably) on the basis that they have.

I do accept it could be entirely above board, and like I said in my reply, I personally probably wouldn't really care as long as I'd covered myself - but it's an odd situation and not one I've ever personally come across.

we agree then
The consultancy are chancing their arm as I reckon the client would not be best pleased at such blatant profiteering, especially as they are quite likely to find out.