Originally posted by Wanderer
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Previously on "Expenses reimbursed directly to individual"
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What makes you think the gig is inside IR35?
Big fails on some of the contract/working conditions and they won't back down?
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Originally posted by Martin at NixonWilliams View PostClare's point is correct and is a common way of dealing with this sort of thing if you do not want to risk upsetting the relationship you have with your client by standing your ground - though I don't agree with companies forcing contractors into doing this purely because they do not want to pay the VAT.
I suppose you ought to consider how much is at stake, you said it is a one-off so providing it is only a one-off Clare's solution is probably the best option for you under the circumstances.
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Clare's point is correct and is a common way of dealing with this sort of thing if you do not want to risk upsetting the relationship you have with your client by standing your ground - though I don't agree with companies forcing contractors into doing this purely because they do not want to pay the VAT.
I suppose you ought to consider how much is at stake, you said it is a one-off so providing it is only a one-off Clare's solution is probably the best option for you under the circumstances.
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Originally posted by Martin at NixonWilliams View PostThis makes more sense now - The services provided by banks are exmpt from VAT, and so they cannot reclaim the VAT they pay.
It is still wrong of them to ask you this in my opinion, they are contracted to your business and therefore your business should incur and recharge such costs.
My advice stands in that you should avoid the arrangement if this is possible.
Martin
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Originally posted by Clare@InTouch View PostIf they absolutely refuse then you could offer an alternative - bill through the company but reduce the value of the expenses to the net + VAT value they are happy to pay. Your company will lose out slightly, but at least it's all done through the company rather than personally.
Thanks for the suggestion!
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Originally posted by TheFaQQer View PostBank pays the company expenses plus VAT, then claims the VAT back.
It could possibly be the case that the VAT is not reclaimable by the end client; thus trying to avoid being billed it in the first place.
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Oops missed Martins reply.
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If they absolutely refuse then you could offer an alternative - bill through the company but reduce the value of the expenses to the net + VAT value they are happy to pay. Your company will lose out slightly, but at least it's all done through the company rather than personally.
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Originally posted by ContractorsSpouse View PostThe client is a bank; apparently this somehow limits their ability to reclaim VAT, and is the reason (or at least one of the reasons) they do this.
It is still wrong of them to ask you this in my opinion, they are contracted to your business and therefore your business should incur and recharge such costs.
My advice stands in that you should avoid the arrangement if this is possible.
Martin
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Originally posted by ContractorsSpouse View PostThe client is a bank; apparently this somehow limits their ability to reclaim VAT, and is the reason (or at least one of the reasons) they do this.
Bank pays the company expenses plus VAT, then claims the VAT back.
Zero sum game, which adds to your inconvenience and might cost you more.
I'd tell them that unfortunately, you've taken professional advice and have been advised not to accept individual payments directly.
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Originally posted by Martin at NixonWilliams View PostHave they explained their reasons for wanting to avoid the expenses being paid through the company? It sounds like they are trying to avoid the VAT, however if they are VAT registered it is unlikely to cost them any extra.
It is possible for you to act as the agent instead of your company, but this could also come at a cost to you if you are on the flat rate scheme as you will lose out on the additional income. There is also the impact this has on your personal cash flow of course, what if you are not paid? I'd rather the company suffer the bad debt and get tax relief etc than be out of pocket personally.
My advice would be to avoid this arrangement unless there is a plausible reason for doing it.
I hope this helps.
Martin
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Originally posted by northernladuk View PostWhat did your accountant suggest?
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Originally posted by ContractorsSpouse View PostClient has offered to cover expenses for a one-off overseas trip. Client is paying some items directly, but wants to book accommodation (preferential rates) and accommodation needs to be paid for at checkout by the individual. Client wants to reimburse the individual staying/paying directly. They do not want OurCo to invoice Client.
It is possible for you to act as the agent instead of your company, but this could also come at a cost to you if you are on the flat rate scheme as you will lose out on the additional income. There is also the impact this has on your personal cash flow of course, what if you are not paid? I'd rather the company suffer the bad debt and get tax relief etc than be out of pocket personally.
My advice would be to avoid this arrangement unless there is a plausible reason for doing it.
I hope this helps.
Martin
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I'd ask the accountant whether if you were forced to go the route that the client suggests, would you need to declare the expenses being reimbursed as unearned income?
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