Umbrella Companies that process expenses properly

[Acme Thunderer]

I'm currently with PayStream and have to travel regularly on client business. This is straight up client reimbursable expenses e.g. Client sends me to a Remote site for a couple of days to do some work and I claim the Travel, Hotel and Meals.

While PayStream are normally very efficient when doing payroll and allowing Salary Sacrifice Payments into my SIPP, their expense department is making too many mistakes for my liking

Examples include: Not processing individual parts of a claim, just plain missed
Wrongly denying parts of claim because there are items on the receipt which are not claimable, but they are not actually being claimed

And my favourite, Not paying you the VAT part of the Claim because they think client should be paying the whole expense to which Invoice VAT gets added i.e. VAT on VAT. Last time I had to get the finance department of the agency to explain it to them.

I have just checked my last expense claim and out of 14 items on the claim, 5 haven't been processed and they haven't paid me the VAT part again. I can't remember the last time I didn't have to chase something from an expense claim.

I understand that Umbrella Company margins are very tight and processing expenses is probably an unwanted overhead but is this fairly normal within the Umbrella industry? Anyone get any better experiences and who with?

[Glencky]

I'll say early so I won't get your hopes up - my only experience is also with Paystream so I can't answer your core question. However not sure if you've seen my thread immediately below which is also about Paystream and expenses. Overall I have similar experience of them to you - I think they're really efficient with general pay, general enquiries and salary sacrifice into my SIPP, but my experience with expenses has been poor.

I have much less experience of the expenses than you, however - 2 trips so far and one planned next week. I haven't had any of the issues you have had, the actual value of my expenses has been processed correctly (although I've had very simple claims, I think the biggest had only 5 items as generally I Can't Be Arsed With Expenses). My issues have been twofold - repeated delays AND tax relief or the lack thereof.

I'll be interested to see how this thread develops. I recommended somebody to them this week, a close friend - but I only did it before checking their contract wasn't going to include a lot of expenses! It wasn't, so I was happy to recommend. But if there is a company that is equally efficient with the other stuff and is better on expenses, I'd love to know it.

I think my issue has more legitimacy in that I think there are issues with HMRC's guidance which I am falling foul of. But the process of working through that has been way more painful than it should've been (I'm up to 10+ phone calls and several emails and my agent and I are both incredibly frustrated over it).

They seem to invest properly in their customer services = good; and in their payroll processes = also good; but the Expenses Team is apparently, so I was told this week, only 2 people and they're 'hidden in the back end' of the operation (understandably in many ways). What bothers me is there doesn't seem to be effective escalation in place so I can easily believe your issues.

[eek]

I'm currently with PayStream and have to travel regularly on client business. This is straight up client reimbursable expenses e.g. Client sends me to a Remote site for a couple of days to do some work and I claim the Travel, Hotel and Meals.

While PayStream are normally very efficient when doing payroll and allowing Salary Sacrifice Payments into my SIPP, their expense department is making too many mistakes for my liking

Examples include: Not processing individual parts of a claim, just plain missed
Wrongly denying parts of claim because there are items on the receipt which are not claimable, but they are not actually being claimed

And my favourite, Not paying you the VAT part of the Claim because they think client should be paying the whole expense to which Invoice VAT gets added i.e. VAT on VAT. Last time I had to get the finance department of the agency to explain it to them.

Just because the Agency is doing things wrong doesn't mean that Paystream are doing things wrong. VAT charged on top of VAT is exactly what should happen on a hotel bill if you follow HMRC rules exactly.

If an agency is based in the UK then VAT should be charged on top of expenses unless it's a disbursement - see VAT: costs or disbursements passed to customers - GOV.UK (www.gov.uk) for the details.

As for Glencky 's point - the go to umbrella here is always going to be Clarity Umbrella because we trust them...

[Glencky]

Yes, I had a good experience liaising with Clarity briefly before having to go to Paystream because Clarity weren't (at the time, at least) on Hays' approved list and certainly weren't going to be in time. Given a choice, I'd have definitely gone for Clarity based on feedback on here plus their engagement on here.

[Acme Thunderer]

Just because the Agency is doing things wrong doesn't mean that Paystream are doing things wrong. VAT charged on top of VAT is exactly what should happen on a hotel bill if you follow HMRC rules exactly.

If an agency is based in the UK then VAT should be charged on top of expenses unless it's a disbursement - see VAT: costs or disbursements passed to customers - GOV.UK (www.gov.uk) for the details.

As for Glencky 's point - the go to umbrella here is always going to be Clarity Umbrella because we trust them...

I don't think I have every had a client that accepts VAT being charged on VAT for expenses. The expenses are charged back net of VAT at invoice line item level. They then have VAT added to them. Anything else allows the umbrella company to make a profit on the VAT.

[malvolio]

I don't think I have every had a client that accepts VAT being charged on VAT for expenses. The expenses are charged back net of VAT at invoice line item level. They then have VAT added to them. Anything else allows the umbrella company to make a profit on the VAT.

You are absolutely not charging VAT on VAT. Your costs including VAT are what YourCo has spent to deliver the service and is what you should bill. Any invoice you raise then has to have VAT added to it at the appropriate rate. If someone does the sums across the whole supply chain, the balance of input and output VAT payments to HMRC will be the same anyway.

I believe this has been driven by the big financial clients who cannot be VAT registered (although the small holding companies who process such costs can,...) and agencies have been brainwashed by them.

But it is seriously not worth bothering about. Any variation in your invoice value will only be in the VAT element, and you recover all of yours anyway. If the umbrella is making money on it (and they aren't...) that would be evasion - but that is not your problem.

[Acme Thunderer]

You are absolutely not charging VAT on VAT. Your costs including VAT are what YourCo has spent to deliver the service and is what you should bill. Any invoice you raise then has to have VAT added to it at the appropriate rate. If someone does the sums across the whole supply chain, the balance of input and output VAT payments to HMRC will be the same anyway.

I believe this has been driven by the big financial clients who cannot be VAT registered (although the small holding companies who process such costs can,...) and agencies have been brainwashed by them.

But it is seriously not worth bothering about. Any variation in your invoice value will only be in the VAT element, and you recover all of yours anyway. If the umbrella is making money on it (and they aren't...) that would be evasion - but that is not your problem.

Malvolio - I'm working an inside IR35 Contract through an umbrella company so don't raise invoices. I also have never worked for a financial client, all my end clients are VAT registered so they get to claim the VAT back.

I am being left out of pocket as the VAT part of my expenses i.e. the VAT charged to me by the hotel is not getting paid back to me. The umbrella company will make money on it as the they will reclaim the VAT for the Hotel via the VAT return.

Example
I stay in hotel cost £100 + VAT £120 in total
I submit expense claim for Hotel listing £100 net and £20 VAT
Self Bill Invoice gets raised for £100 Hotel Bill. VAT is then added to the invoice to take it back to £120
Client pays £100 plus £20 VAT
Umbrella only pays me £100, retains £20 VAT for HMRC
Umbrella company then claims back the Hotel Bill VAT, thus offsetting the £20 they are holding for HMRC. Umbrella is now up £20 on the deal at my expense

[malvolio]

Malvolio - I'm working an inside IR35 Contract through an umbrella company so don't raise invoices. I also have never worked for a financial client, all my end clients are VAT registered so they get to claim the VAT back.

I am being left out of pocket as the VAT part of my expenses i.e. the VAT charged to me by the hotel is not getting paid back to me. The umbrella company will make money on it as the they will reclaim the VAT for the Hotel via the VAT return.

Example
I stay in hotel cost £100 + VAT £120 in total
I submit expense claim for Hotel listing £100 net and £20 VAT
Self Bill Invoice gets raised for £100 Hotel Bill. VAT is then added to the invoice to take it back to £120
Client pays £100 plus £20 VAT
Umbrella only pays me £100, retains £20 VAT for HMRC
Umbrella company then claims back the Hotel Bill VAT, thus offsetting the £20 they are holding for HMRC. Umbrella is now up £20 on the deal at my expense

Except the VAT is not and never was your money. As an umbrella user you are not VAT registered so you can't reclaim it any more than you can claim it off your Tesco bill.

Someone has to pay the VAT: in your case, it's you.

[eek]

Malvolio - I'm working an inside IR35 Contract through an umbrella company so don't raise invoices. I also have never worked for a financial client, all my end clients are VAT registered so they get to claim the VAT back.

I am being left out of pocket as the VAT part of my expenses i.e. the VAT charged to me by the hotel is not getting paid back to me. The umbrella company will make money on it as the they will reclaim the VAT for the Hotel via the VAT return.

Example
I stay in hotel cost £100 + VAT £120 in total
I submit expense claim for Hotel listing £100 net and £20 VAT
Self Bill Invoice gets raised for £100 Hotel Bill. VAT is then added to the invoice to take it back to £120
Client pays £100 plus £20 VAT
Umbrella only pays me £100, retains £20 VAT for HMRC
Umbrella company then claims back the Hotel Bill VAT, thus offsetting the £20 they are holding for HMRC. Umbrella is now up £20 on the deal at my expense

You should be submitting a hotel bill for £120 because that is what the disbursement rate for a hotel is.

so the screw up is somewhere between you and the agency because the umbrella is doing exactly what it’s supposed to do - which is collect the VAT paid on the invoice and send it to HMRC.

[Acme Thunderer]

You should be submitting a hotel bill for £120 because that is what the disbursement rate for a hotel is.

so the screw up is somewhere between you and the agency because the umbrella is doing exactly what it’s supposed to do - which is collect the VAT paid on the invoice and send it to HMRC.

I do submit a bill for £120, but in common with most expenses systems I have used, you have to enter the net and VAT.

Funnily enough I remembered us having a similar conversation about this subject a year ago, and you supported the position that the VAT should have been paid to me.

https://forums.contractoruk.com/umbr...ml#post2862608