Travel Expense Advice Needed

[busgrw]

Hi,

Hoping someone can help.

I am a contractor working as a Project Manager for a large Retail bank through a limited company. I recently traveled to London for a project meeting and stayed in a Hotel @ £156/ night (this includes VAT of £26) which was paid out of my personal account. When I submit an expense report at the end of the month and this is approved, £156 will land in my Business account as the bank pays me for my monthly invoice and expenses. The way I understand it, this £156 will then be liable for VAT which means I will in effect be out of pocket (by the 14% flat rate amount) when I submit my VAT return.

Can someone please advise what I need to do to ensure I receive the full expense that I paid back as I’m not keen to be out of pocket for any future travel I need to make with the bank? My accountant doesn't seem to be able to help.

Any help would be appreciated.

T

[northernladuk]

My accountant doesn't seem to be able to help.

Sort this out first. You are going to be a lot more out of pocket if you are paying an accountant and he isn't doing what he is supposed to do.

Why is he not 'able' to help. He doesn't know the answer or just isn't answering emails/phone?

[Clare@InTouch]

If you're flat rate then there's often a slight difference in VAT, as you cannot reclaim the amount charged.

You could simply invoice the client for "Consultancy plus Expenses" plus VAT - so say your consultancy is £1,000 you'd invoice for £1,156 plus VAT.

It makes no difference whether you've been charged VAT on the hotel yourself when you pass the cost on, as you're not invoicing your client for a hotel - you're invoicing for expenses. Unless it's a disbursement of course.

This should help: HM Revenue & Customs: Costs passed on to clients - disbursements - and VAT

[malvolio]

Also, try a bit if searching; this has all be answered in recent months in some dtail. There is no reason to lose out the VAT element, it's your company, you charge what you see fit as part of the cost of delivering your services, and what you get paid personally doesn't come into it. It's also a good reason for YourCo to pay your work-related bills rather than faffing around sending your own money.

Then again, you're worrying about £24 that strictly speaking doesn't belong to you anyway. Is that really that important?

[Martin at NixonWilliams]

Hi,

Hoping someone can help.

I am a contractor working as a Project Manager for a large Retail bank through a limited company. I recently traveled to London for a project meeting and stayed in a Hotel @ £156/ night (this includes VAT of £26) which was paid out of my personal account. When I submit an expense report at the end of the month and this is approved, £156 will land in my Business account as the bank pays me for my monthly invoice and expenses. The way I understand it, this £156 will then be liable for VAT which means I will in effect be out of pocket (by the 14% flat rate amount) when I submit my VAT return.

Can someone please advise what I need to do to ensure I receive the full expense that I paid back as I’m not keen to be out of pocket for any future travel I need to make with the bank? My accountant doesn't seem to be able to help.

You would normally charge VAT on top of the £156 but this depends on what you have agreed with your client/agency as some do not allow this and will only pay VAT on the net value of the expense. Have a read of the following thread which discusses this in a bit more detail:

http://forums.contractoruk.com/accou...ml#post1903021

I hope this helps.

Martin

[Craig@Clarity]

You're going to be onto a loss maker if it continues like this. What should happen is:

You incur the hotel cost of £156 (inc VAT) which your company reimburses you for in full so you're not personally out of pocket.

Your company then "recharges" £156 plus VAT (£187.20) to the client/agency and they pay your company.

The key point here is that you're "recharging an expense" rather than raising an invoice for disbursements. I'm also guessing you're not in the business sector or providing accommodation services but rather some other consultancy which means you add 20% VAT on your expenses to be recharged.

If you need further details and support to back this up, look 'ere HM Revenue & Customs: Costs passed on to clients - disbursements - and VAT

Hope this helps.

[Craig@Clarity]

HEY CLAiRE!!!

[TheFaQQer]

The way I understand it, this £156 will then be liable for VAT which means I will in effect be out of pocket (by the 14% flat rate amount) when I submit my VAT return.

You shouldn't be. Why would you not claim the £156 back from your company anyway, to reimburse the employee for what they have spent?

[Clare@InTouch]

HEY CLAiRE!!!

[busgrw]

Thanks everyone for your replies. All good helpful info.

Malvolio, the £156 is just the example. I'll be out a lot more in reality. And fair point on doing more searching. Just thought i'd get an answer quicker with a post given time is short
Martin at NixonWilliams - this is exactly my position. My client will not allow me to add VAT on top of VAT (this is also what my Accountant advised to do). Will have a read of the thread now.
Craig@InTouch, same as above. I cannot recharge as an expense as the self billing system my client uses automatically creates it as an invoice.

I'm assuming the "hi Claire" one is an 'in-house' joke so will not take the bait

TheFaQQer - I'm not sure. It sounds simple when you put it like that so will ask the question to my accountant and see what she says.

Thanks all.