recharging expenses

[knight007]

Hi,

Hopefully someone can help since my accountant has confused me.

I am the director of my limited company and the company is VAT registered (Flat Rate Scheme).

My client is asking me to attend a training event. My contract with the client states that they will
pay any expenses (travel e.t.c) incurred as a result of attending such training events.

The expense policy in my contract states:

Car travel to/from agreed locations 45p per mile (up to 10,000 mile p.a. then 25p per mile)
Train fares to/from agreed locations At actual cost, economy class
Accommodation and subsistence At actual reasonable cost


Some questions:

-When I invoice my client, do I include a line for the expenses rechargable to the client?

-Do I apply VAT to these expenses? - even mileage?

-If I do 100 miles as a result of this training event and invoice the customer (100 *0.45p) + VAT = £54.00. How much do I claim back from my own ltd company i.e £54.00 or £45.00?

-If charging VAT on the expenses, does the VAT portion for the expenses qualify for return to HMRC when I do my quaterly VAT return?

-What if the travel costs is not Vattable? i.e. public transport - train / taxi. Do I still charge VAT on it?

[TheFaQQer]

Hi,

Hopefully someone can help since my accountant has confused me.

Sounds like you need a better accountant, or to ask for clarification.

When I invoice my client, do I include a line for the expenses rechargable to the client?

Yes

Do I apply VAT to these expenses? - even mileage?

Yes - you are invoicing them for services which include an expenses element. If VAT registered, then you must charge VAT.

If I do 100 miles as a result of this training event and invoice the customer (100 *0.45p) + VAT = £54.00. How much do I claim back from my own ltd company i.e £54.00 or £45.00?

Whatever your company policy is for you claiming expenses from the company. £45

If charging VAT on the expenses, does the VAT portion for the expenses qualify for return to HMRC when I do my quaterly VAT return?

Yes

What if the travel costs is not Vattable? i.e. public transport - train / taxi. Do I still charge VAT on it?

Yes

[knight007]

thanks, that makes it really simple.

[chef]

Sounds like you need a better accountant, or to ask for clarification.

What FaQQer said

you pay your accountant to provide you a service if your not happy or dont understand they should explain it to you better, if they don't meet your expectations then find an accountant that does. Your not being thick by asking for a better explanation, your running your business.

[knight007]

what about If the expense incurred already had VAT added to it.
e.g. Imagine if rail travel was taxed at 20% so my rail receipt would have been something like:
Subtotal: 100
VAT (20%): 20
Total = £120.

When recharging this to client, do I apply a further VAT on top? or do I have to subtract the vat portion of the expense i.e £20 and then reapply it at the end when applying my 20%.

[TheFaQQer]

what about If the expense incurred already had VAT added to it.
e.g. Imagine if rail travel was taxed at 20% so my rail receipt would have been something like:
Subtotal: 100
VAT (20%): 20
Total = £120.

When recharging this to client, do I apply a further VAT on top? or do I have to subtract the vat portion of the expense i.e £20 and then reapply it at the end when applying my 20%.

Add up your expenses.

Put them on an invoice, either with the rest of your charges or as a separate invoice.

If you are VAT registered, then apply VAT to the invoice.

[Fred Bloggs]

Yuu need to read this article carefully. Note that some agencies will point blank refuse to pay VAT on top of expenses that you have already paid VAT on despite the fact that they are wrong when you are invoicing a recharge not a disbursement. I lost money last year when the agency point blank refused to pay my VAT as invoiced, my accountant assured me that I was invoicing correctly and I sent the agency a marked up copy of the HMRC article above but they still refused to pay.

[knight007]

Another thing about rechargable expenses. If I'm claiming mileage from the customer for attending this training event do I claim the mileage from my registered company address to the training location or from my clients offices to the training location?

[NotAllThere]

Yuu need to read this article carefully. Note that some agencies will point blank refuse to pay VAT on top of expenses that you have already paid VAT on despite the fact that they are wrong when you are invoicing a recharge not a disbursement. I lost money last year when the agency point blank refused to pay my VAT as invoiced, my accountant assured me that I was invoicing correctly and I sent the agency a marked up copy of the HMRC article above but they still refused to pay.

You submitted them a legal invoice, with correctly applied VAT, and they haven't paid the invoice in full. Sounds like a trigger for dunning. Once it got to court, surely they'd have had to pay up. Might be too late, but I'd start dunning them now, and add admin charges and interest in accordance with the appropriate legislation..

Another thing about rechargable expenses. If I'm claiming mileage from the customer for attending this training event do I claim the mileage from my registered company address to the training location or from my clients offices to the training location?

Assuming you're still within the 2 years rule - so you're already claiming home to client travel - it will be from whereever you start your journey to the training course.

[Fred Bloggs]

I agree with your thoughts but given the amount of money involved I put it down to experience. In addition, I found that the agency's self invoicing system made it very hard to get them to take any notice of anything I sent to them. In the end they even started to put the phone down when I called them.

I won't say how, but I did get what was owed to me anyway by other means. I will never work through that agency again and I will try to put off anyone who I know is thinking of working through them, most of the jobs are always up with several agents so you get to choose who to apply through.