Contractor expense claim

[malvolio]

Sigh...


Does this help explain it -> http://forums.contractoruk.com/accou...ml#post1627522 ?

[SarahL2012]

Am i being petty for putting in an expense claim for £5 on ID photos? A fellow contractor laught at me...but why should i be out of pocket for client?


Also if i pay an hotel expense claim which costs say £120 Inc VAT. Do i charge client VAT on total (im VAT registered)

£120 + 20% = £144.

I am sure i used to do this, but same contractor said no way can u charge VAT twice. But if i paid a hotel bill of £120 from my own personal pocket, then if only charge client £120, then i have to pay corporation tax on this, then i will be out of pocket when reimbursed.
any clues?

You need to charge your client £100 (the net hotel cost) plus VAT at 20%.

[Sausage Surprise]

You need to charge your client £100 (the net hotel cost) plus VAT at 20%.

Then you'll be out of pocket...

[captainham]

You need to charge your client £100 (the net hotel cost) plus VAT at 20%.

You only need to do this if this is what you've agreed in the contract. If, like mine, the contract says that you can recharge the full amount, then that's what you can do, i.e. expense £120 + 20% VAT on top of that.

[JamJarST]

Then you'll be out of pocket...

Not by the full VAT amount though as was explained earlier.

[diesel]

thanks for replies.

I am due to travel to Far East with a major client (big company over 40,000 employees inc many contractors)

This is response from client FInance Dept:
We cannot pay VAT on any receipts that have not incurred VAT.

The finance approval is there so that sub contractors do not send their expense claims directly to their agent but submit via finance. It is not approval before travel.

I am VAT registered on FRS.
Whenever i have incurred any expense for client business, i bill them the total amount i have paid on my personal credit card +VAT.
So what client is saying if i dont pay VAT say for food then i cant charge it.
When i am travelling for a few weeks they give me a daily allowance. I plan to bill this to agent + UK VAT.

I cant get hold of my accountant right now, but please can anyone direct me to any HMRC weblinks that i can tell client finance company to use. As at the moment by client has many Ltd Co contractors but treat us very unfairly with what we can claim, use, travel time etc.

[SarahL2012]

You only need to do this if this is what you've agreed in the contract. If, like mine, the contract says that you can recharge the full amount, then that's what you can do, i.e. expense £120 + 20% VAT on top of that.

Fair enough - but then the client is paying £144 for a hotel room that has only cost £100 + £20 VAT.

Speaking as an accountant I would send that invoice straight back to you and refuse to pay it!

You should be able to recover the £20 spent through your VAT return and I suspect the only reason people think they're out of pocket is because they're on the flat rate scheme (or not VAT registered). If you're on the flat rate scheme then the rate you pay over to HMRC is reduced because you're not recovering your input VAT. If you're incurring loads of vatable expenses then you shouldn't be on the flat rate scheme.

So I'll stick by my £100 (which is the net cost to the OP after he's recovered the £20 on his VAT return) plus £20 as the amount to invoice to the client

[diesel]

Fair enough - but then the client is paying £144 for a hotel room that has only cost £100 + £20 VAT.

Speaking as an accountant I would send that invoice straight back to you and refuse to pay it!

You should be able to recover the £20 spent through your VAT return and I suspect the only reason people think they're out of pocket is because they're on the flat rate scheme (or not VAT registered). If you're on the flat rate scheme then the rate you pay over to HMRC is reduced because you're not recovering your input VAT. If you're incurring loads of vatable expenses then you shouldn't be on the flat rate scheme.

So I'll stick by my £100 (which is the net cost to the OP after he's recovered the £20 on his VAT return) plus £20 as the amount to invoice to the client

Sarah,
i see your point but i always billed previous clients in this manner and never been questioned. My current newish client is working differently.
So if i pay £120 out of my personal CC for a bill, then you are saying i only charge agency £120..?
So how does my Ltd Co pay my director incurred expenses the same £120 back? (without incurring FRS VAT on the £120?)

Also i am doing overseas travel end of the day i get all my totals from hotels, allowance, taxis etc add them up and add VAT to the agency - are you & my existing client saying this is not the case?

(there appears to be different systems for this, and really welcome any HMRC links or referenced examples as my query has gone back to client finance dept. not asking to profit on expenses but to do it 100% right)
thanks

[northernladuk]

Sarah,
i see your point but i always billed previous clients in this manner and never been questioned. My current newish client is working differently.
So if i pay £120 out of my personal CC for a bill, then you are saying i only charge agency £120..?
So how does my Ltd Co pay my director incurred expenses the same £120 back? (without incurring FRS VAT on the £120?)

Also i am doing overseas travel end of the day i get all my totals from hotels, allowance, taxis etc add them up and add VAT to the agency - are you & my existing client saying this is not the case?

(there appears to be different systems for this, and really welcome any HMRC links or referenced examples as my query has gone back to client finance dept. not asking to profit on expenses but to do it 100% right)
thanks

What does your accountant suggest?

[diesel]

What does your accountant suggest?

cant get hold of her, will have to await for an email reply. but i want to know what other Ltd Co FRS contractors do.