Company pays or reclaim via expenses?

[TykeMerc]

Wrong I'm afraid.

Although VAT rules normally prevent a VAT registered company reclaiming VAT on supplies that are not made directly to it, there are certain circumstances when the rules are relaxed. Expenses incurred and paid for by staff on behalf of the company are an example of a circumstance in which the rules are relaxed. In order to qualify for this concession, employees must be reimbursed for their actual expenditure and not merely receive a round sum allowance. Also VAT invoices must be obtained by the staff and handed to the employer as part of their expenses claim. In these circumstances it does not matter if the invoices is made out to the employee rather than the employer.

I am an accountant with fifteen years of experience, have worked for two FTSE100 companies, I now run my own practice, I have had VAT inspections on clients books and this type of reclaim passed and I certainly deserve to be trading as an accountant.

Regards.

David.

WHS apart from:-

I'm not an accountant, but I've been VAT registered for close to 18 years and I've had several VAT inspections on several Ltd companies, I've never had the inspectors raise an eyebrow over expenses having the VAT elements reclaimed.
I don't operate on the VAT flat rate scheme.

[IR35 Avoider]

There was a threat from the EU recently to force HMRC to no longer allow the VAT part of expenses to be reclaimable, but I think (though I'm not sure) that it has been seen off.

[original PM]

Of course the company can claim the VAT - why do you think when you put in an expenses claim to a company you are working for (if you are a permie or can remeber back that far) they insist on VAT receipt?

If you think about it there is no way any company would not ensure all expenses were paid for by themselves if they could not reclaim the VAT for reimbursing employees.

Could be huge cost or savings implications (which obviously there are not cos the company can reclaim the VAT)!

[ASB]

There was a threat from the EU recently to force HMRC to no longer allow the VAT part of expenses to be reclaimable, but I think (though I'm not sure) that it has been seen off.

I think that is the Dutch case which did potentially cause a bit of a fuss. Essentially the ruling was that the supply had be be made thought a series of vat registered entities, thus the thought was that if an employee settled any bills themseleves then the VAT would not be reclaimable. Not sure what happened in the end apart from nobody seems to take a blind bit of notice of it.