Travel expense vat

[SueEllen]

None of the last three companies I have worked at would accept an expense on which vat was charged twice - no vat on vat. EG (not sure if this is a good example) - hotel £100 + 20% vat - all the companies insisted on an expense claim of £120, not £120 plus vat.

You should have got them to book the hotel for you.

[TheCyclingProgrammer]

None of the last three companies I have worked at would accept an expense on which vat was charged twice - no vat on vat. EG (not sure if this is a good example) - hotel £100 + 20% vat - all the companies insisted on an expense claim of £120, not £120 plus vat.

It's not VAT on VAT. However if they insisted on recharging at net cost then that's up to them. As I said before, the additional VAT cost that you didn't recover if on the FRS should be covered by your FRS surplus.

What did they say when you incurred a cost that had zero VAT, eg £100 train ticket? Presumably you charged £100 + VAT, not £100 inc VAT?

[GlenW]

None of the last three companies I have worked at would accept an expense on which vat was charged twice - no vat on vat. EG (not sure if this is a good example) - hotel £100 + 20% vat - all the companies insisted on an expense claim of £120, not £120 plus vat.

You was robbed!

[billridley]

VAT

None of the last three companies I have worked at would accept an expense on which vat was charged twice - no vat on vat. EG (not sure if this is a good example) - hotel £100 + 20% vat - all the companies insisted on an expense claim of £120, not £120 plus vat.

[glennh]

Thanks for the advice folks.

[Contreras]

The question comes up quite frequently. This one is clearly not a disbursement (it rarely is).

As TCP says, VAT must be added whatever route is used to charge the expenses. If charged at net + VAT then yes there is a small loss on each expense. You can however charge what you like, subject to agreement, just so long as VAT is added on top.

I don't see it as being out of pocket when you look at the contract overall (unless you're charging more expenses than booked hours!). Ideally you'd be in a position to anticipate the level of expenses when negotiating the contract and factor this into the rate accordingly. If it's no longer attractive then options are to re-negotiate terms or de-register from FRS.

[TheFaQQer]

Hi Folks,

I recently travelled on behalf of my client. Some of the costs were paid on my company card and claimed back. The reimbursed sum paid by the client is accounted as company income and hence subject to vat (I'm on FRS). This means I've lost out to the value of the vat. My accountant suggested that when I reclaim the expenses I should charge vat to the client but I'm not sure there's an option to do this on the clients expense system nor whether they'd accept that. I'm thinking that perhaps if I'm in this situation again I should use a personal card rather than my company card so the expense is paid back to me personally. That way my business account is not involved and therefore no vat.

Any thoughts?
thanks
G

What does the contract say?

The sum invoiced must include VAT, so you either suck that up yourself, or you invoice the expenses plus VAT.

There have been a number of discussions about it around these parts before.

[Kenny]

Disbursements

Hi,

The following link to the HMRC website provides more details on what falls as a disbursement and what is classed as a recharge.

https://www.gov.uk/vat-costs-or-disb...d-to-customers

Hope this helps when you go back to your client.

[TheCyclingProgrammer]

If you rebill expenses to clients, then you MUST charge VAT. The only exception is disbursements that are zero rated or exempt.

Paying on your personal card and having your company reimburse you makes no difference to this.

You can rebill at gross cost if the client accepts this. If they insist on net cost plus VAT then yes, you will lose out on the VAT but that's what your FRS surplus is for. You're still in a better position than if you couldn't recharge expenses to your client at all!

[Alan @ BroomeAffinity]

You should invoice the expenses. And add VAT to them. I'd suggest that the expenses system is for employees which is why it doesn't have a vat option.

[glennh]

Hi Folks,

I recently travelled on behalf of my client. Some of the costs were paid on my company card and claimed back. The reimbursed sum paid by the client is accounted as company income and hence subject to vat (I'm on FRS). This means I've lost out to the value of the vat. My accountant suggested that when I reclaim the expenses I should charge vat to the client but I'm not sure there's an option to do this on the clients expense system nor whether they'd accept that. I'm thinking that perhaps if I'm in this situation again I should use a personal card rather than my company card so the expense is paid back to me personally. That way my business account is not involved and therefore no vat.

Any thoughts?
thanks
G