I am VAT registered and on the Flat Rate Scheme.
I am confused whether to add VAT to expenses where the VAT is already paid at source.
An example. I take a taxi to the airport and pay the taxi driver 100 pounds and this includes VAT. So the taxman has received 16.66 in VAT from the taxi company as ex VAT the fare is 83.33. As I paid from my pocket I claim the money back from my client who pays me 100 as that is what I paid the taxi company.
The question is: Do I need to claim VAT on the 100 to my client so that I receive 120 from the client? My accountant is saying that I need to pay VAT on the 100 I received from my client dispite no profit being made or value added. This effectively means HMRC are getting paid VAT twice. It doesn't seem correct to me and given that I didn't add VAT to the client I am now faced with paying VAT from my company even when VAT on the original service was paid. I am really confused by this.
Thanks in advance for any insight into this.
I am confused whether to add VAT to expenses where the VAT is already paid at source.
An example. I take a taxi to the airport and pay the taxi driver 100 pounds and this includes VAT. So the taxman has received 16.66 in VAT from the taxi company as ex VAT the fare is 83.33. As I paid from my pocket I claim the money back from my client who pays me 100 as that is what I paid the taxi company.
The question is: Do I need to claim VAT on the 100 to my client so that I receive 120 from the client? My accountant is saying that I need to pay VAT on the 100 I received from my client dispite no profit being made or value added. This effectively means HMRC are getting paid VAT twice. It doesn't seem correct to me and given that I didn't add VAT to the client I am now faced with paying VAT from my company even when VAT on the original service was paid. I am really confused by this.
Thanks in advance for any insight into this.
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