• Visitors can check out the Forum FAQ by clicking this link. You have to register before you can post: click the REGISTER link above to proceed. To start viewing messages, select the forum that you want to visit from the selection below. View our Forum Privacy Policy.
  • Want to receive the latest contracting news and advice straight to your inbox? Sign up to the ContractorUK newsletter here. Every sign up will also be entered into a draw to WIN £100 Amazon vouchers!

You are not logged in or you do not have permission to access this page. This could be due to one of several reasons:

  • You are not logged in. If you are already registered, fill in the form below to log in, or follow the "Sign Up" link to register a new account.
  • You may not have sufficient privileges to access this page. Are you trying to edit someone else's post, access administrative features or some other privileged system?
  • If you are trying to post, the administrator may have disabled your account, or it may be awaiting activation.

Previously on "Flat Rate - Claiming VAT inclusive expenses from clients"

Collapse

  • ste
    replied
    Many thanks to all for your helpful replies.

    Much appreciated.

    Leave a comment:


  • THEPUMA
    replied
    Originally posted by malvolio
    No, what I'm saying is that if you are registered for VAT, FRS or not, you do not have a choice about how to apply VAT to your invoice, other than by not charging for the item in the first place - and why would you do that?

    Your hotel room cost £117.50, i.e. £100 + £17.50 VAT. You charge your client £117.50 + £20.56 VAT. You have gained £20.56 as a result, and that goes straight to HMRC (ignoring FRS under which you give back slightly less). At no point do you lose money.

    To take that further, under non-FRS rules, that transaction contained £38.06 VAT but you would offset the £17.50 VAT element of your hotel bill as input VAT so you still end up with £20.56 to pay back
    I agree that you are obliged to charge VAT on all expenses recharged (irrespective of the VAT status of the expense in question).

    However, if you are not on the FRS I don't understand why you suggest charging £117.50 + VAT (unless it is an arbitrary profit-making exercise). You would logically charge £100 + VAT as that is the cost to you.

    If you are on the FRS you may consider charging £117.50 + VAT in order to break even on the exercise but if you are not on the FRS you are simply maiing a profit of £17.50 if you charge £117.50 + VAT.

    Leave a comment:


  • Spacecadet
    replied
    Expenses plus VAT is the standard

    Alternatively, just charge a day rate that is inclusive of any expenses you expect to incur.

    The client (if not on FRS themselves) should be able to claim the VAT back as it is a business incurred expense for them and they will have your VAT registration number from the Invoice.

    Don't forget, You're invoicing them "at cost" for expenses you have incurred in providing your services. You are not an employee reclaiming expenses!

    Edit: and never send the client receipts unless they explicitly query the invoice and ask for proof of the expenses. Instead, give a break of the charges in the invoice
    Last edited by Spacecadet; 15 May 2007, 14:52.

    Leave a comment:


  • malvolio
    replied
    No, what I'm saying is that if you are registered for VAT, FRS or not, you do not have a choice about how to apply VAT to your invoice, other than by not charging for the item in the first place - and why would you do that?

    Your hotel room cost £117.50, i.e. £100 + £17.50 VAT. You charge your client £117.50 + £20.56 VAT. You have gained £20.56 as a result, and that goes straight to HMRC (ignoring FRS under which you give back slightly less). At no point do you lose money.

    To take that further, under non-FRS rules, that transaction contained £38.06 VAT but you would offset the £17.50 VAT element of your hotel bill as input VAT so you still end up with £20.56 to pay back

    Leave a comment:


  • THEPUMA
    replied
    Originally posted by malvolio
    Yep. Invoice rules are to total all charges and add VAT to that amount. If one of the components already contains VAT amounts, it doesn't matter - and if you work it out (ignoring the FRS bit) you'll find the total VAT is either contra'd out or the end consumer pays it, which is the whole idea.

    FRS is effectively a discount to you for simplifying things, it does not affect how you charge VAT to your clients.
    I'm not sure whether I am disagreeing with Mal or not but, to be clear, if you incur an expense of £10 + VAT and charge your client £10 + VAT, you are worse off than you would have been had you not incurred the expense on behalf of your client, assuming the VAT is irrecoverable under the flat rate scheme.

    I find, however, that most clients would prefer to charge £10 + VAT (as opposed to £11.75 + VAT) to their client rather than jeopardise the goodwill of their relationship with their client over such a petty matter, despite being worse off.

    Leave a comment:


  • malvolio
    replied
    Yep. Invoice rules are to total all charges and add VAT to that amount. If one of the components already contains VAT amounts, it doesn't matter - and if you work it out (ignoring the FRS bit) you'll find the total VAT is either contra'd out or the end consumer pays it, which is the whole idea.

    FRS is effectively a discount to you for simplifying things, it does not affect how you charge VAT to your clients.

    Leave a comment:


  • VectraMan
    replied
    As I understand it, it's a sale, so you have to add on VAT even if it's to reimburse you for something that's VAT free (like a train ticket).

    If the client is happy to pay you £11.75 back for the telephone calls then you invoice £11.75 + 17.5% (so yes VAT on VAT). They may only be prepared to reimburse you the net value, but it's between you and the client. But regardless, it would be illegal for you not to add VAT to your invoice.

    FRS makes no difference, as that's just between you and the revenue.

    But IANAA.

    Leave a comment:


  • Flat Rate - Claiming VAT inclusive expenses from clients

    Invoicing under flat rate scheme.

    If I wish to claim back costs incurred whilst working for a client by sending the receipts; how do I invoice.

    eg: a telephone bill for £11.75 including VAT

    Of course I cannot charge £11.75 plus VAT (vat on vat), but if I invoice the exact ammount will I not be worse of by having to pay the flat rate on what I have simply claimed back??

    Also, if I have a receipt with no VAT (eg: travel ticket) do I just add 17.5% to my invoice in the normal way?

    Thanks for your help.

Working...
X