Reclaiming expenses from a client issue.

[expat]

because it's a sale they agreed to

The key words.

[VectraMan]

Damn right. Think of it this way: you are invoicing your client for something that they have agreed to pay. It doesn't matter what it is and why they have agreed to pay that amount. .

I suppose there's no reason why they shouldn't pay you double the hotel bill if they offered.

I did this recently with charging the client for mileage expenses. They told me they'd pay 40p per mile, but I've personally exceeded the point where I can claim 40p per mile, so would only pay myself 25p per mile. On top of that, I reclaim VAT at 2p per mile, so really the cost to my company is 23p per mile. So how much do I charge the client, and how much VAT do I charge?

The answer was 40p per mile + 17.5% VAT, because it's a sale they agreed to and it's normal for businesses to deal in ex-VAT amounts. The difference is just profit to the company.

[expat]

Don't worry about it. It is perfectly legal, it is perfectly logical, it is actually what the VAT rules say you should do. The VAT inclusive expense is part of your cost of sales, and you have to add VAT to any amount you invoice including all such costs.

Do the sums all the way up the supply chain and you'll find it's only the end consumer pays anything - everyone else merely returns the bit of the VAT they've collected to the Exciseman.

Damn right. Think of it this way: you are invoicing your client for something that they have agreed to pay. It doesn't matter what it is and why they have agreed to pay that amount.

So you invoice them, you add VAT to the invoice, they pay you VAT inclusive, you send the VAT on to HMRC.

NOW, quite separately, you look at the cost to you, and if it included VAT, you reclaim from HMRC the VAt that you paid.

Doesn't matter whether it's a taxi fare, a PC, or what:
1. you paid cost + VAT, you claim back VAT on cost.
2. you invoiced an amount + VAT, you receive this VAT and pass it on to HMRC.


Note that in this case the sum invoiced is turnover in your business.

[BillHicksRIP]

Thanks very much for the replies. Really helped me out.

[Nixon Williams]

We advise clients to charge VAT on the gross amount including the VAT, so yes there is VAT added on top of VAT, but this is acceptable by the the VAT people and it is simple.

You can if you wish only charge VAT on the net so you are in effect charging what you paid out but it is more messy. I have only come across one end client that insisted on this method.

Keep it simple, charge VAT on the total expense that you are recharging.

Alan

[boredsenseless]

Don't worry about it. It is perfectly legal, it is perfectly logical, it is actually what the VAT rules say you should do. The VAT inclusive expense is part of your cost of sales, and you have to add VAT to any amount you invoice including all such costs.

Do the sums all the way up the supply chain and you'll find it's only the end consumer pays anything - everyone else merely returns the bit of the VAT they've collected to the Exciseman.

Now I always thought it was this

You incur the expense.
You reclaim the VAT through your own VAT return
You invoice the customer for the VAT exclusive value and then charge VAT on this.

There is no double VAT

[malvolio]

So you get your hotel bill which includes VAT, and you invoice for that amount and add VAT on as you would any other sale?

You should always charge VAT on everything you invoice for, but I'd expect you to invoice for the net amount of the hotel bill - although I suppose that's really down to the client and whether they see them refunding you for the whole amount, or refunding you as a company.

My head hurts now.

Don't worry about it. It is perfectly legal, it is perfectly logical, it is actually what the VAT rules say you should do. The VAT inclusive expense is part of your cost of sales, and you have to add VAT to any amount you invoice including all such costs.

Do the sums all the way up the supply chain and you'll find it's only the end consumer pays anything - everyone else merely returns the bit of the VAT they've collected to the Exciseman.

[VectraMan]

So you get your hotel bill which includes VAT, and you invoice for that amount and add VAT on as you would any other sale?

You should always charge VAT on everything you invoice for, but I'd expect you to invoice for the net amount of the hotel bill - although I suppose that's really down to the client and whether they see them refunding you for the whole amount, or refunding you as a company.

My head hurts now.

[MrsGoof]

VAT * 2
thats what I do and what my accountant, agency and customer say I must do.

I does make sence, there is a thread here somewhere that explains it.

btw, that big key on the right of the letters is quite usefull.

[BillHicksRIP]

Hi. My end client agreed to pay my hotel bills when they want me to visit their site. Now I'm having a bif of a nightmare trying to recover the money, and am looking for some advice. The contract is through Hays, and I submitted an expense form and had it signed off by the client. A month went by, and then Hays said I had to create an invoice for the expenses, which I did. Another month went by. Now Hays are saying I have to create a new invoice but to add VAT to it, which seems to me they want to add VAT to VAT. My accountant says this is a no-no, but Hays are saying otherwise. I can't bill the client directly as my company needs to be on their internal billing system, and that's not going to happen. I'm a good few thousand out of pocket right now. Can anyone offer any advice, please?