expenses query

[lilelvis2000]

I was talking to some of the accountants recently and they were complaining about some contractors charging expenses (hotel rooms, meals and milage).
How do they get away with that? I certainly haven't tried getting expenses off of my client - but if I knew then what I know now.

Oh another interesting fact..the accountants do no know if the expenses are presented VAT free and then the VAT added on...or they are paying the VAT twice. God! what a gold mine!

I wondered whether it was
- legal to charge their expenses on top
- legal to charge vat on their milage expenses
- if the company is paying VAT on VAT.

Any opinions?

[Sockpuppet]

I was talking to some of the accountants recently and they were complaining about some contractors charging expenses (hotel rooms, meals and milage).
How do they get away with that? I certainly haven't tried getting expenses off of my client - but if I knew then what I know now.

Oh another interesting fact..the accountants do no know if the expenses are presented VAT free and then the VAT added on...or they are paying the VAT twice. God! what a gold mine!

I wondered whether it was
- legal to charge their expenses on top
- legal to charge vat on their milage expenses
- if the company is paying VAT on VAT.

Any opinions?

1) Yes, you can charge the client what you want as long as they agree to pay for it. I'd say its probably better to charge the room in the daily rate but if the client asks you to say go to X location you can charge them for additional costs involved.

2) Yes, you charge VAT on EVERYTHING your company sells unless it is zero rated and you have a cert saying this.

3) Possibly. If a room costs £100 ex vat you can charge them £117.50 and then put vat on top of that (Total: £138.06) or you could charge them £100 as you can claim the VAT back so the cost to you is £100 which you pass on to the client. See point 1 with you can charge them what you like.

[NickFitz]

Warning: everything I say may be incorrect. I am however certain that life isn't that easy.

I certainly haven't tried getting expenses off of my client - but if I knew then what I know now.

If your contract with the client provides for the reclaiming of expenses, all well and good. In practice what it usually means is that a team that they need in the same place for the duration of the project gets put up in the same hotel, and the client gets the expenses-related tax breaks.

You can't offset expenses that have been re-imbursed by the client against tax, as they have already offset them against their tax . The "reclaiming expenses" thing is just an accounting procedure to make sure everything's legal and above board; one couldn't, for example, go and stay at a different hotel and expect them to pay for it without a lot of hassle, because, of course, they've got a good rate at that one hotel for making a long-term block booking. The provision of accommodation at their expense is mainly a carrot used to help them get the right people.

You have to do the sums, and see if it's worth taking the contract on the basis of the client re-imbursing such expenses; if you don't mind staying in grotty B&Bs and they are willing to give you a higher rate if you don't stay in their hotel, then maybe you can make something of it. But as they're the kind of client that's happy to book up an entire floor of an expensive hotel for the sake of accommodating a pack of geeks for six months, they're also very unlikely to have flexibility in their procedures.

Oh another interesting fact..the accountants do no know if the expenses are presented VAT free and then the VAT added on...or they are paying the VAT twice. God! what a gold mine!

Any opinions?

My opinion is that these accountants are fundamentally incompetent. If their first complaint about contractors hadn't already demonstrated their total lack of understanding, this revelation of their inability to comprehend the system they are paid to operate (and their apparent unwillingness to find out what they don't know) certainly does

Bad accountants