Accounting for Substitution

[FarmerPalmer]

I have used the services of another company to perform some work for my client, under my contractual right of substitution.

I believe that this should be accounted for in my company's annual accounts as "Cost Of Sales" and not an expense.

i.e. my understanding being that this cost is a direct result of a sale made by my company and is not an administrative expense.

Could anyone please verify if this is correct?

[Jessica@WhiteFieldTax]

Yes, correct.

However it doesn't really make a huge difference, as it all comes off profit and tax

[FarmerPalmer]

Yes, correct.

However it doesn't really make a huge difference, as it all comes off profit and tax

Thanks Jessica. I know it doesn't effect the tax bill, but just want to make sure I account for it correctly.