I've recently spent a week working on the current client's sites in mainland Europe during which I've had to fund my own accommodation/meals/taxis etc to be paid back by the agency at a later point. I've spoken to the agency about their expenses process and outlined below how I believe MyCo and myself would fit into this process.
Every step of the above process makes sense, however the only nagging doubts in my mind are as follows:
Help/advice/suggestions to ask my accountant/suggestions to read the first timers guides all gratefully appreciated - thanks.
- I've incurred expenses personally in a mix of GBP and EUR and submit an expenses form to the agency detailing these expenses.
- The agency has stated that they will convert the EUR amount to GBP using their reference exchange rate and calculate the total expenses amount owed in GBP
- By way of the standard monthly self-billing mechanism, the agency will pay MyCo for the days worked plus VAT (as normal), plus the expenses amount determined previously. VAT is not added onto the expenses amount.
- Once the invoice mentioned in the previous step has been paid, MyCo then pays me personally the expense amount determined above.
Every step of the above process makes sense, however the only nagging doubts in my mind are as follows:
- How I would justify to the VAT man that the expenses element of the stated invoice would not be subject to VAT? I've seen other companies do this - for example my mobile phone invoice includes an insurance element that is not VATable. However, I've never been in a situation where MyCo has submitted an invoice where not all of the amount is subject to VAT.
- If I have incurred the expenses personally, it seems a little odd from an accounting standpoint that the repayment of these expenses should make their way to me from the agency via MyCo. I'm thinking that it may look as if MyCo has recieved a payment as a result of issuing an invoice, then paid around £500 of that money directly to me with no mention of personal tax or dividends. Obviously, I have receipts (and hopefully mention of expenses on the self-bill invoice) to account for the expenses incurred - but it still doesn't seem quite right somehow.
Help/advice/suggestions to ask my accountant/suggestions to read the first timers guides all gratefully appreciated - thanks.
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