VAT on Stuff

[CoolCat]

I spend £100, get a receipt that doesn't have a VAT breakdown. - this bit is fine

You should then log it in the Parasol portal as a "client billable expense", once this is submitted and approved Parasol will send the agency an invoice but add VAT to it. So VAT gets added to any VAT you have already paid. (I know its silly but that's the way the tax rules are written apparently)

Agency bills the client - not your problem buy they should be adding VAT correctly

Agency sends the £100 to Parasol - this bit is wrong, as the agency owes Parasol 120, ie the 100 plus 20 VAT

Parasol now has the £100 from the client, yes but they owe 20 % to the tax man

Parasol gives me £83.33, they have only had part payment from the agency

Good luck


I lose £16.67

[TheCyclingProgrammer]

This has been discussed on here a lot. Whether you re-bill expenses to a client net or gross of VAT is a matter of agreement between you and the client, or in this case the client, you and the umbrella. HMRC rules simply state that VAT must be charged, not what the net cost should be.

You are right in that if Parasol have invoiced for £100 net, then the client owes them £20. But it may be that they've invoiced £100 gross. You should have checked with Parasol whether they treat expenses in their portal as net or gross of any VAT and how they re-bill these.

[CoolCat]

This has been discussed on here a lot. Whether you re-bill expenses to a client net or gross of VAT is a matter of agreement between you and the client, or in this case the client, you and the umbrella. HMRC rules simply state that VAT must be charged, not what the net cost should be.

You are right in that if Parasol have invoiced for £100 net, then the client owes them £20. But it may be that they've invoiced £100 gross. You should have checked with Parasol whether they treat expenses in their portal as net or gross of any VAT and how they re-bill these.

Parasol do invoice in exactly the way I described, and if you talk to the VAT man that's exactly the way its supposed to be done.

[TheCyclingProgrammer]

Parasol do invoice in exactly the way I described, and if you talk to the VAT man that's exactly the way its supposed to be done.

The VAT man doesnt care how you re-bill your expenses as long as you charge VAT. If your contract states that expenses should be re-billed net of VAT, then that's what you should charge. Equally it could be a flat or capped amount. There is no VAT rule that says you must bill them for the gross amount and then add VAT on top.