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Question regarding expenses as a sub contractor

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    Question regarding expenses as a sub contractor

    Hello all

    I am not vat registered, and working on an hourly rate to a local company.
    Not particularly relevant here, but using my own vehicle, tools etc.

    While using their vehicle a few weeks, back, I incurred fuel costs and I also purchased some materials from my own pocket to complete the installation.

    I submitted my invoice to them, along with a breakdown of dates, the item purchased, where purchased and amount.
    I also included a scanned copy of all the receipts for proof of purchase.

    At the end of the invoice, I listed materials as one total, labour as another total and then the complete owed amount.

    Come payment, they only paid the labour portion of the invoice and withheld the materials. They say they will not pay it until I produce VAT receipts.
    Well, I didn't obtain a VAT receipt for the fuel (I forgot to ask), but they have a copy of the Visa receipt for the amount. I could find the receipt for the other materials, but again, they have a copy of the Screwfix receipt.

    I can only assume they want my VAT receipts to illegally claim my VAT back (and I know they have done this with other sub contractors).

    I am standing my ground, and told them they cannot 'split' my invoice like that. I have provided more than enough evidence of my expenditure.

    Or... am I wrong?

    #2
    If you sold these items to the company, then they wouldn't be able to claim the VAT back. If they bought them on your behalf, they would.

    They must pay your bill as it stands. These are your expenses. Not theirs.

    If you suspect VAT fraud, report them to HMRC. Chances are they don't realise they're doing anything wrong.
    Down with racism. Long live miscegenation!

    Comment


      #3
      Originally posted by NotAllThere View Post
      If you sold these items to the company, then they wouldn't be able to claim the VAT back. If they bought them on your behalf, they would.

      They must pay your bill as it stands. These are your expenses. Not theirs.

      If you suspect VAT fraud, report them to HMRC. Chances are they don't realise they're doing anything wrong.
      The OP may not like this but
      1) a company can insist on whatever paperwork and jumps they desire for expenses as you actually have no direct right to them.
      2) It's not illegal to claim back VAT on fuel purchases for mileage claims and it's fine to block without prove of fuel payment.
      3) by accepting partial payment it's going to be harder to get those expenses back because you've accepted payment for the work.

      But apart from being 100% wrong (hardly surprising as you don't actually live in the UK) thanks for the post
      Last edited by eek; 10 August 2020, 07:25.
      merely at clientco for the entertainment

      Comment


        #4
        Issue a Credit Note for the full amount - advise them of this before you do so.

        Re-invoice, and only invoice for the amount of your work, plus the items for which you have VAT invoices. This should tie in with their remittance.

        It really isn't their fault for you not obtaining & supplying qualifying VAT invoices. A debit / credit card receipt is not sufficient for VAT purposes. It needs to reflect the supplier's VAT number, and the VAT paid.

        If you manage to obtain the VAT invoices which are missing, then invoice them for these amounts separately.
        I was an IPSE Consultative Council Member, until the BoD abolished it. I am not an IPSE Member, since they have no longer have any relevance to me, as an IT Contractor. Read my lips...I recommend QDOS for ALL your Insurance requirements (Contact me for a referral code).

        Comment


          #5
          VAT law is pretty uniform across Europe, and I did work as a contractor in the UK for many years, handling my own VAT affairs. This question has been raising its head for decades, and really is no different from the recent thread concerning ltd co claiming expenses from a consultancy.

          Originally posted by eek View Post
          1) a company can insist on whatever paperwork and jumps they desire for expenses as you actually have no direct right to them.
          Depends on the contract. If it says you do, then you do. If it says you don't without the correct paperwork, then you don't. If it says nothing... probabilities lie with the OP.
          Originally posted by eek View Post
          2) It's not illegal to claim back VAT on fuel purchases for mileage claims and it's fine to block without prove of fuel payment.
          Of course it's not. For fuel purchases that you or your employee have incurred, or that you've agreed will be personally reimbursed. Regarding proof of payment, see point 1).

          When my ltd co contracts a plumber to fit a dishwasher in the company kitchen, where there are no current connections, his invoice could have three items on it.
          1. Labour
          2. Parts
          3. Fuel

          My ltd co could insist that the plumber shows me the receipts for 2 & 3, but the plumber doesn't have to do that unless it's agreed in advance that he will. The invoice stands. If he wishes to mark up the parts and fuel costs by 100% and charge my co. that, he can do it. If he's not VAT registered, then there is no VAT for my co to reclaim. If he's VAT registered, then he adds VAT to the total, and my co can claim it back. . What my company cannot do is take the receipts for 2&3 and claim the VAT back for that.

          Now, if you see the case differently, feel free to explain.
          Down with racism. Long live miscegenation!

          Comment


            #6
            Originally posted by eek View Post
            2) It's not illegal to claim back VAT on fuel purchases for mileage claims and it's fine to block without prove of fuel payment.
            you sure about that?
            The OP puts it on the invoice, adds no VAT as not VAT registered. If the OP was VAT registered then he'd charge 20% and the client can reclaim that VAT.
            I'm not so sure that the client can claim the VAT on another company's VAT receipt. It's not a disbursement.

            Realistically the client will be fine claiming the VAT and as it won't have been double claimed it won't be fraud. But I don't think it's correct VAT handling as the client have not incurred a mileage expense with any VAT on it.
            See You Next Tuesday

            Comment


              #7
              OP is recharging for the cost of the fuel incurred, presumably as agreed in their contract. As they aren’t VAT registered the cost to them was whatever the VAT inclusive price was, say £12 for example.

              There is no VAT for the client to reclaim as OP hasn’t charged them VAT, they have charged £12 to cover their costs. I’m aware employers can claim VAT on fuel costs incurred by employees but I don’t think that extends to supplier recharges.

              If OP had been VAT registered they would have reclaimed the £2 as input VAT so the cost to them would have been £10, which they could have recharged as £10 + VAT. Same total amount but the client would have then been able to reclaim the VAT themselves on OPs invoice (and they still wouldn’t have needed a VAT receipt as the relevant VAT is on OPs invoice).

              Comment


                #8
                Thanks for all the varied responses.

                After a chat with online HMRC, they are wrong, not me.

                They withheld all the payments for materials supplied for no good reason, not just the fuel one they were disputing.
                They keep asking me to complete an employees expenses sheet. Wrong.

                It's cleared up now. They need me more than I need them, so I told them today was my last day. Life's too short for this messing around. Got paid 10 minutes later.

                I KNOW they fraudulently claim VAT back. I worked for them on the cards for 18 months and they would get people to bring receipts in for work on their private houses and claim them back.

                I will be reporting them, once I get my final invoice paid.

                Thank you for the advice.

                Comment


                  #9
                  Originally posted by Stevolution View Post
                  Hello all

                  I am not vat registered, and working on an hourly rate to a local company.
                  Not particularly relevant here, but using my own vehicle, tools etc.

                  While using their vehicle a few weeks, back, I incurred fuel costs and I also purchased some materials from my own pocket to complete the installation.

                  I submitted my invoice to them, along with a breakdown of dates, the item purchased, where purchased and amount.
                  I also included a scanned copy of all the receipts for proof of purchase.

                  At the end of the invoice, I listed materials as one total, labour as another total and then the complete owed amount.

                  Come payment, they only paid the labour portion of the invoice and withheld the materials. They say they will not pay it until I produce VAT receipts.
                  Well, I didn't obtain a VAT receipt for the fuel (I forgot to ask), but they have a copy of the Visa receipt for the amount. I could find the receipt for the other materials, but again, they have a copy of the Screwfix receipt.

                  I can only assume they want my VAT receipts to illegally claim my VAT back (and I know they have done this with other sub contractors).

                  I am standing my ground, and told them they cannot 'split' my invoice like that. I have provided more than enough evidence of my expenditure.

                  Or... am I wrong?
                  First question I'd ask you which no-one has yet is what do you do? Sounds to me like you're a subbie in construction? If so, the logistics and treatment of invoicing for labour, materials, CIS and expenses is different to those that have advised here.

                  Comment

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