Expenses question

[MarillionFan]

I tend to do all my own book-keeping and then send everything to the accountant at year end.

Concerning expenses where the client re-imburses you.

I rack up about £1000 each month in expenses both Vatable and non-vatable for a non-EU country. I put those expenses into the agent who then re-imburses my LTD.

I've been putting those on my company accounts and book-keeping them in addition to other expenses I incur for running the LTD.

I then pay the money re-imbursed to me personally.

Question is, do I need to put these down in my accounts as they're a pain in the arse, and frankly net position is, I paid personally and get the money back from the agent. For VAT purposes it has no impact

[Lance]

If the agent pays into your personal account then I don’t see a problem. As long as you’re not receiving a BIK. Although I guess your agent isn’t doing your P11d so you’d still have to do that.

[MarillionFan]

If the agent pays into your personal account then I don’t see a problem. As long as you’re not receiving a BIK. Although I guess your agent isn’t doing your P11d so you’d still have to do that.

I have it paid into the company account at the moment. I should change that.

[TheCyclingProgrammer]

All expenses should be invoiced to the client or agency. They are part of your turnover and should be accounted for correctly.

[Spikeh]

**IGNORE THIS POST - Contains incorrect information - read further posts**

I have it paid into the company account at the moment. I should change that.

If that's the case - and you are VAT registered - you should have been invoicing for the expenses + VAT, rather than just getting reimbursed directly, and claiming relief on any VAT you've incurred. This is advice I got from HMRC and my accountant just last week. Worth noting that any expenses that already have VAT applied to them need to be re-billed NET (i.e. before VAT), and then apply VAT on your invoice total so the client is not being charged VAT twice:

Flights: £150
Airport Parking: £30 (inc £5 VAT)
Taxi: £20
Accommodation: £500

You would rebill as follows (you can add a markup if you so desire, but most clients will want to see receipt evidence):

Flights: £150
Airport Parking: £25
Taxi: £20
Accommodation: £500
Sub-Total: £695
VAT: £139
Total bill to client: £834

The client will then claim relief on the £139 VAT, if they're VAT registered.

If you are doing this via your own bank account, then you don't charge VAT - as long as it's a simple re-bill. Personally I don't like to get my personal finances intertwined with business though.

[TonyF]

Worth noting that any expenses that already have VAT applied to them need to be re-billed NET (i.e. before VAT), and then apply VAT on your invoice total so the client is not being charged VAT twice

That isnt right.

[Spikeh]

That isnt right.

HMRC seems to think it is!

I believe its up to you, though - most clients won't want to be charged VAT twice - and if they're asking for receipt evidence, it'll be fairly clear they're being charged twice.

[malvolio]

HMRC seems to think it is!

I believe its up to you, though - most clients won't want to be charged VAT twice - and if they're asking for receipt evidence, it'll be fairly clear they're being charged twice.

Don't care what HMRC appear to think, you have to apply VAT to any invoiced items. It's up to you (and to some extent your client) how much you actually charge for the item and if you want to faff around taking off the VAT percentage then that's your decision. But it is not necessary, nor is there any question of VAT on VAT. The net recovery of VAT incurred is the same either way.

These are business expenses, not disbursements.

[Spikeh]

Official guidance here:

https://www.gov.uk/guidance/vat-cost...d-to-customers

These kind of expenses aren't "disbursements", so VAT has to be charged - though that's not strictly what we're talking about here - its whether you re-bill (or "recharge" as HMRC put it) with added output VAT or not.

If you're on a flat rate VAT scheme, you can't reclaim the input VAT - so it would be beneficial to you to charge output VAT on top of the existing input VAT, but entirely your choice.

If you're NOT on a flat rate scheme, you can reclaim relief on the input VAT - but adding output VAT on to the existing input VAT when you re-bill your client doesn't benefit anyone except HMRC.

Most of us contractors won't be on a flat rate scheme any more due to changes that were introduced last year, so the only people you're helping by charging your client input VAT + output VAT is HMRC.

I'm actually just on the phone to HMRC, I'll get them to confirm again and post my findings.

[TonyF]

HMRC seems to think it is!

No they don't - they rightly explain that unless the payment is a disbursement then it is a matter of contract law and nothing to do with them.

I incur £12 car parking fee, including VAT. I could recharge that to the client at £10 + VAT, £12 + VAT, £100 + VAT, £1 + VAT or not bother billing the expense to the client. It i nothing to do with HMRC apart from if you are charging VAT (on whatever amount) the right sum needs to be paid to them.