VAT on expenses

[Clippy]

I have a question regarding VAT on expenses.

My engagement with the end client is as below:

My Ltd ---> EB ---> Svc Co ---> Client Co.

At the end of the month, any expenses incurred for that month are totted up and submitted to the Svc Co via their online system and then subsequently billed to the EB for payment.

As I am not VAT registered, I don't enter any VAT in the Svc Co. system or on my invoice to the EB.

Svc Co now saying the following:

"All invoices received are vatable. However, you will only ever receive the net value as the VAT is absorbed by the service co".

i.e. my expense claims should include a VAT element.

Worried that if I do this, it will be fraud as I am not VAT registered.

Sounds like they don't know what they are talking about so thought I would pose the question here.

[Sockpuppet]

Sounds like they don't know what they are talking about so thought I would pose the question here.

You don't charge VAT.

Seems what they are trying to do is:

Expense of £100
Vat of £17.50

Total = £117.50

They are saying you invoice: £100 + your vat of £17.50 = £117.50

Instead of £117.50 + VAT = £138.06

Simple!

[malvolio]

Worried that if I do this, it will be fraud as I am not VAT registered.

There's your answer. If you are not VAT registered, you cannot charge nor reclaim VAT. End of... What other people do wth your costs are not your concern.

Except, of course, if your gross turnover is above £75k (?? I think - check the limit) you have to be VAT registered.