Expenses

[blacjac]

If your hotel bill is 115 and 15 of that is VAT then to recharge the cost to your client (assuming you can claim all the vat back on the hotel bill) you would charge your net cost plus vat i.e. 100 plus 15 (so it is exactly the same as the client paying for the bill themselves). Agree you'd make more money if you charged 115 plus vat but that's not how it should strictly work.

Like I said:

Not if you are billing it as part of your service you shouldn't

[PayMatters]

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[ASB]

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The horses mouth:-

http://www.hmrc.gov.uk/vat/managing/...bursements.htm

[PayMatters]

Yes even if the hotel bill is a disbursement (which is unlikely) you don't charge it plus vat.

[blacjac]

Yes even if the hotel bill is a disbursement (which is unlikely) you don't charge it plus vat.

Have you actually read the link?

There are many incidental costs that your business might incur that you can't exclude from the VAT calculation when you invoice your customers.

Any costs that your business incurs itself in the course of supplying goods or services to customers are not disbursements for VAT purposes. It's you, and not your customer, who purchases the goods or services

they're known as 'recharges', and not disbursements, for VAT. You'll have to charge VAT on them whether you paid any VAT or not.

[PayMatters]

Yes I do know all this! I'd like to think I learnt something having worked as a Chartered Accountant for 20 years.

All I'm saying is you don't recharge the gross cost plus vat if you're VAT registered. And this is correct whether it's a disbursement or not.

If you spend £115 on a hotel and can claim the £15 vat back you do not recharge the client £115 plus VAT. To do so would mean you make £15 profit on the expense which in my opinion is not correct. If it's a disbursement you don't claim the vat back or charge vat on the recharge but the cost to the end client is still £115.

I was pulled up on it and accused that the advice I was giving was incorrect.

Maybe we've just got our wires crossed and are actually saying the same thing?

All the Best, PayMatters

[Beefy198]

I add the VAT on anything. I called the VAT helpline once and explained my situation and the exact words they used were: "that's not a disbursement".

[PayMatters]

Agree normally a disbursement is something that say your solicitor pays for on your behalf i.e. a land registry cost.

[blacjac]

All I'm saying is you don't recharge the gross cost plus vat if you're VAT registered. And this is correct whether it's a disbursement or not.

I guess this where you and every accountant I have delt with differ then...

Just to be clear, if as part of my service I stay in a hotel for £100 per night plus VAT (total £115), then I bill my client £115 + VAT (total £132.25).

This is because I am adding the hotel cost to my service charge and not claiming the cost back from the client.
As per my original post.

the smiley was because this topic has been covered on here many times over the years, but around every 3 months a new brolly springs up and tries to convince everyone they know the rules better.......

[Gravy Train]

[QUOTE=blacjac;820003]

Just to be clear, if as part of my service I stay in a hotel for £100 per night plus VAT (total £115), then I bill my client £115 + VAT (total £132.25).

QUOTE]

And you hand back (if not on the FRS) the £17.25 VAT charged, not £17.25 plus £15 from original bill.