VAT on supplies from non VAT registered suppliers

[kevinm]

Hi all,

I am a VAT registered company and charge VAT at standard rate. Recently, I have started using another consultant to assist me on an assignment. He is not VAT registered. He will charge me X £'s for his services each month and I will add this to my services and charge my client the sum of the two plus 15%VAT.
But what happens with expenses. He will invoice me for expenses he incurs inclusive of the VAT paid. I appreciate that I can't claim the tax element of this against my VAT return, but what do I charge my client. Do I simply take the amount he has charged me and add 15% to my client, or do I effectively "deduct" the VAT element form these charges before I add the 15% VAT.

[centurian]

Hi all,

I am a VAT registered company and charge VAT at standard rate. Recently, I have started using another consultant to assist me on an assignment. He is not VAT registered. He will charge me X £'s for his services each month and I will add this to my services and charge my client the sum of the two plus 15%VAT.
But what happens with expenses. He will invoice me for expenses he incurs inclusive of the VAT paid. I appreciate that I can't claim the tax element of this against my VAT return, but what do I charge my client. Do I simply take the amount he has charged me and add 15% to my client, or do I effectively "deduct" the VAT element form these charges before I add the 15% VAT.

All totally AFAIK...

You can "charge" your client whatever you like + VAT. The client isn't paying the expense directly. They are paying a charge that you are levying, which just happens to cover expense costs.

Whether they are happy to pay this is another matter, particularly if convention states that it is done another way.

I wouldn't completely rule out being able to claim the VAT back on your suppliers expenses though, especially if you take on the paying of those expenses, so they become your company's expenses, rather than his. Whether you can do this will depend on the nature of the expenses. I would seek expert advice on this though