Reply to: Company pays or reclaim via expenses?

[ASB]

There was a threat from the EU recently to force HMRC to no longer allow the VAT part of expenses to be reclaimable, but I think (though I'm not sure) that it has been seen off.

I think that is the Dutch case which did potentially cause a bit of a fuss. Essentially the ruling was that the supply had be be made thought a series of vat registered entities, thus the thought was that if an employee settled any bills themseleves then the VAT would not be reclaimable. Not sure what happened in the end apart from nobody seems to take a blind bit of notice of it.

[original PM]

Of course the company can claim the VAT - why do you think when you put in an expenses claim to a company you are working for (if you are a permie or can remeber back that far) they insist on VAT receipt?

If you think about it there is no way any company would not ensure all expenses were paid for by themselves if they could not reclaim the VAT for reimbursing employees.

Could be huge cost or savings implications (which obviously there are not cos the company can reclaim the VAT)!

[IR35 Avoider]

There was a threat from the EU recently to force HMRC to no longer allow the VAT part of expenses to be reclaimable, but I think (though I'm not sure) that it has been seen off.

[TykeMerc]

Wrong I'm afraid.

Although VAT rules normally prevent a VAT registered company reclaiming VAT on supplies that are not made directly to it, there are certain circumstances when the rules are relaxed. Expenses incurred and paid for by staff on behalf of the company are an example of a circumstance in which the rules are relaxed. In order to qualify for this concession, employees must be reimbursed for their actual expenditure and not merely receive a round sum allowance. Also VAT invoices must be obtained by the staff and handed to the employer as part of their expenses claim. In these circumstances it does not matter if the invoices is made out to the employee rather than the employer.

I am an accountant with fifteen years of experience, have worked for two FTSE100 companies, I now run my own practice, I have had VAT inspections on clients books and this type of reclaim passed and I certainly deserve to be trading as an accountant.

Regards.

David.

WHS apart from:-

I'm not an accountant, but I've been VAT registered for close to 18 years and I've had several VAT inspections on several Ltd companies, I've never had the inspectors raise an eyebrow over expenses having the VAT elements reclaimed.
I don't operate on the VAT flat rate scheme.

[Zen Contracting]

No it cannot and that's from an accountant. When you as an individual make a purchase which includes VAT, you as an individual are NOT registered for VAT. Therefore, you cannot CLAIM BACK or CHARGE VAT to a 3rd party ie your VAT registered limited co.

Your co can reimburse you IN FULL for the expense but CANNOT claim the VAT element since you (the individual) are NOT VAT registered.

Anyone's accountant who's saying an individual can charge their co VAT or their limited co can claim VAT on an individual's expenses reimbursement that has no VAT element on it, doesnt deserve to be trading as an accountant.

Wrong I'm afraid.

Although VAT rules normally prevent a VAT registered company reclaiming VAT on supplies that are not made directly to it, there are certain circumstances when the rules are relaxed. Expenses incurred and paid for by staff on behalf of the company are an example of a circumstance in which the rules are relaxed. In order to qualify for this concession, employees must be reimbursed for their actual expenditure and not merely receive a round sum allowance. Also VAT invoices must be obtained by the staff and handed to the employer as part of their expenses claim. In these circumstances it does not matter if the invoices is made out to the employee rather than the employer.

I am an accountant with fifteen years of experience, have worked for two FTSE100 companies, I now run my own practice, I have had VAT inspections on clients books and this type of reclaim passed and I certainly deserve to be trading as an accountant.

Regards.

David.

[BolshieBastard]

Yes it can.

No it cannot and that's from an accountant. When you as an individual make a purchase which includes VAT, you as an individual are NOT registered for VAT. Therefore, you cannot CLAIM BACK or CHARGE VAT to a 3rd party ie your VAT registered limited co.

Your co can reimburse you IN FULL for the expense but CANNOT claim the VAT element since you (the individual) are NOT VAT registered.

Anyone's accountant who's saying an individual can charge their co VAT or their limited co can claim VAT on an individual's expenses reimbursement that has no VAT element on it, doesnt deserve to be trading as an accountant.

[Mustang]

Is it more appropriate to

• Pay for accommodation/expenses yourself then reclaim as an expense
• Use company debit card to pay

I'm inclined to use the company card where they are directly reimbursable?

It depends on how busy I am. Normally I do a mix of the 2 with cash payments being paid by me and card payments being paid by MyCo. However, if I am busy and cant log who paid what in the expenses for a while I make things simple to remember and pay everythign myself and claim it back later.

HTH

[malvolio]

Personally, all business expenses come out of the company bank account using MyCo's debit card. My only routine expense claim is mileage for my car on company business. I am careful not to reclaim VAT where appropriate, of course.

Makes for a really boring P11D though.

[VectraMan]

That's gotta be rubbish surely???

WTS.

Done it lots of times.

[Sockpuppet]

Assuming you are VAT registered, you should ALWAYS pay for expenses via the company. This is because the company can claim the VAT on the expense where this is appropriate.

If you pay out of your own pocket, the company can reimburse you in full but the company cannot then claim the VAT which you paid as an individual on the total bill.

Yes it can.

[blacjac]

Assuming you are VAT registered, you should ALWAYS pay for expenses via the company. This is because the company can claim the VAT on the expense where this is appropriate.

If you pay out of your own pocket, the company can reimburse you in full but the company cannot then claim the VAT which you paid as an individual on the total bill.

My accountant would disagree with you.

No difference in wether or not you can claim the VAT back, he recomends getting a personal credit card that offers cash back.

That way, you put your company purchases through your personal card and claim them back as expenses, plus you get to keep the cash back

[Olly]

Assuming you are VAT registered, you should ALWAYS pay for expenses via the company. This is because the company can claim the VAT on the expense where this is appropriate.

If you pay out of your own pocket, the company can reimburse you in full but the company cannot then claim the VAT which you paid as an individual on the total bill.

That's gotta be rubbish surely???

[Gonzo]

not necessarily. If you are on Flate Rate Scheme, you don't claim the VAT on purchases.

Which is why the Flat Rate Scheme is not suitable for those who have high expenses.

[pmeswani]

Assuming you are VAT registered, you should ALWAYS pay for expenses via the company. This is because the company can claim the VAT on the expense where this is appropriate.

If you pay out of your own pocket, the company can reimburse you in full but the company cannot then claim the VAT which you paid as an individual on the total bill.

not necessarily. If you are on Flate Rate Scheme, you don't claim the VAT on purchases.

[BolshieBastard]

Assuming you are VAT registered, you should ALWAYS pay for expenses via the company. This is because the company can claim the VAT on the expense where this is appropriate.

If you pay out of your own pocket, the company can reimburse you in full but the company cannot then claim the VAT which you paid as an individual on the total bill.