Reply to: expense

[DirtyDog]

/end thread

You would hope.

I bet it isn't.

[TheCyclingProgrammer]

Why would the client reimbursing you directly be an IR35 problem? I don't recall any case where this was raised as a pointer and it's not mentioned in the Business Entity Tests...

Being reimbursed personally, like any other employee, could be contrived to make it seem like you were part and parcel of the organisation or thought of as an employee. Maybe.

[Wanderer]

There's no relevance to IR35 assuming you invoice business-to-business. Client reimbursing the expense direct to you would be a problem however.

Why would the client reimbursing you directly be an IR35 problem? I don't recall any case where this was raised as a pointer and it's not mentioned in the Business Entity Tests...

[TheCyclingProgrammer]

Crikey, is this competition to see how complicated we can make it?

Your travel expenses are not a disbursement. (but paying for the client's ticket would be.)

There's no relevance to IR35 assuming you invoice business-to-business. Client reimbursing the expense direct to you would be a problem however.

Invoice for the amount (net or gross) depending on what is agreed with the agency. Charge VAT on top.

Separate invoice for expenses, or separate item on the same invoice, it's your call.

Keep receipts for your own records and as proof if the client needs it.

/end thread

You would hope.

[Contreras]

"disbursement" what is this ? either way it is not a problem in view of hmrc, isn't it ? that's the main thing I need ?

Crikey, is this competition to see how complicated we can make it?

Your travel expenses are not a disbursement. (but paying for the client's ticket would be.)

There's no relevance to IR35 assuming you invoice business-to-business. Client reimbursing the expense direct to you would be a problem however.

Invoice for the amount (net or gross) depending on what is agreed with the agency. Charge VAT on top.

Separate invoice for expenses, or separate item on the same invoice, it's your call.

Keep receipts for your own records and as proof if the client needs it.

[Andy Hallett]

Good luck with the expense + VAT thing, that's probably the hardest thing to get an agency to accept and usually requires going through the agent, agent's manager, agent's manager's manager and down the chain to their accounting assistant then to their accounting team leader, to their accounting manager and finally out to an accountant but only after stapling a copy of the HMRC manual to their forehead. Even then, you'll get persistent complaints from them about having to pay VAT on VAT.

A long-term, persistent PITA in my time as a contractor.

We built our system to allow a contractor to invoice with or without the additional VAT.

Must confess it did take a while for me to get my head around the whole VAT on VAT thing!

[TheCyclingProgrammer]

"disbursement" what is this ? either way it is not a problem in view of hmrc, isn't it ? that's the main thing I need ?

Read my previous posts. There's unlikely to be any IR35 issues but if you haven't been charging VAT on your expenses then yes HMRC will have a problem.

Google HMRC disbursement if you want to know what they are but they probably aren't relevant here.

[aoxomoxoa]

"disbursement" what is this ?

Let me put it this way.... Google is your friend, NLUK probably isn't

(Disbursements are expenses you incur on behalf of your client while providing the service, and for which you are reimbursed, e.g. a piece of software or hardware that you buy but which belongs to the client. You put it on your invoice but don't add VAT)

[krssubbu]

That would be a surprise, but like you said...

"disbursement" what is this ? either way it is not a problem in view of hmrc, isn't it ? that's the main thing I need ?

[TheCyclingProgrammer]

Unless they mistakenly think it's a disbursement rather than a straightforward expense, although most agents wouldn't know a disbursement if it bit them on the bollox.

That would be a surprise, but like you said...

[aoxomoxoa]

I'd be very surprised if they've told you not to add VAT to your expenses charge at all.

Unless they mistakenly think it's a disbursement rather than a straightforward expense, although most agents wouldn't know a disbursement if it bit them on the bollox.

[TheCyclingProgrammer]

so are you saying that I should be creating a separate invoice for this or can I just include this x amount in the same invoice and mention "Expense" ?

You can put it on a separate invoice or the same invoice as a separate line. It doesn't really matter. I'd put it all on the same invoice so it's clear what period of work the expense charges relate to.

If the agency wont me VAT then what should I do ?

Tell them that as a VAT-registered trader you have to charge VAT on your service and if they refuse to pay the VAT element, report them to HMRC.

I suspect however that the agency knows you have to charge VAT and you are misinterpreting what they've said to you. They have probably told you not to re-bill the original VAT-inclusive cost, just the VAT-exclusive cost, before adding VAT. I'd be very surprised if they've told you not to add VAT to your expenses charge at all.

[krssubbu]

This doesn't really have anything to do with IR35 but you should be invoicing for your expenses (or agency should be self-billing) and as your expenses are part of your service, you MUST be charging VAT on them, regardless of what underlying charge is. If you mean the agent won't let you charge VAT on top of the original VAT-inclusive cost, then so be it, but you must have a record showing the payment received for expenses and the relevant amount of VAT for your records.

so are you saying that I should be creating a separate invoice for this or can I just include this x amount in the same invoice and mention "Expense" ?

If the agency wont me VAT then what should I do ?

[TheCyclingProgrammer]

Thanks all for your opinion on this.

Actually I think I did this some time ago and agency said I cant VAT for the expense.
I am not too much worried about the VAT (loss I will make out of this). I am just worried if it will be a problem in terms of hmrc ir35 view ?
Can someone please confirm if this will be a problem ?

Thanks

This doesn't really have anything to do with IR35 but you should be invoicing for your expenses (or agency should be self-billing) and as your expenses are part of your service, you MUST be charging VAT on them, regardless of what underlying charge is. If you mean the agent won't let you charge VAT on top of the original VAT-inclusive cost, then so be it, but you must have a record showing the payment received for expenses and the relevant amount of VAT for your records.

[krssubbu]

Thanks all for your opinion on this.

Actually I think I did this some time ago and agency said I cant VAT for the expense.
I am not too much worried about the VAT (loss I will make out of this). I am just worried if it will be a problem in terms of hmrc ir35 view ?
Can someone please confirm if this will be a problem ?

Thanks