VAT on expenses

Discussion in 'Accounts & Finance' started by cap28, May 9, 2008.

  1. cap28

    cap28 UKBF Regular Free Member

    Posts: 17 Likes: 0
    I work in recruitment and have just started placing temporary contractors with clients and am unsure about how to invoice for expenses.

    If I have a contractor on site for 1 week at £200 a day, he drives to the train station 4 miles a day at 50p a mile (£10 a week) and then travels by train to site at a cost of £100 for a weekly ticket (VAT exempt) that can claimed from the employer.

    Labour = £1000
    Petrol = £10
    Rail travel = £100
    Total = £1110
    VAT = £194.25
    Total in VAT = 1304.25

    Or

    Labour = £1000
    Petrol = £10
    VAT = £176.75
    Total = £1186.75
    Rail travel = £100
    Total = £1286.75

    or

    Labour = £1000
    VAT = £175
    Total = £1175
    Rail travel and travel = £110
    Total + exp = £1285

    Do I charge VAT back to customers at the 17.5% for everything or does it change depending on the VAT rating of the item?

    Thanks
    Posted: May 9, 2008 By: cap28 Member since: May 9, 2008
    #1
  2. elainec100@cheapaccounting

    elainec100@cheapaccounting UKBF Regular Full Member

    Posts: 13,271 Likes: 2,871
    What have you included in the T&Cs with your clients - do they pay for expenses or do you foot the bill?
    Posted: May 9, 2008 By: elainec100@cheapaccounting Member since: Nov 4, 2005
    #2
  3. cap28

    cap28 UKBF Regular Free Member

    Posts: 17 Likes: 0
    They pay all expenses, what I need to know is if I charge VAT on items that have already had VAT paid on them or are VAT exempt.
    Posted: May 9, 2008 By: cap28 Member since: May 9, 2008
    #3
  4. Philip Hoyle

    Philip Hoyle UKBF Regular Free Member

    Posts: 1,968 Likes: 997
    VAT is charged on everything. Your first example is correct.
    Posted: May 9, 2008 By: Philip Hoyle Member since: Apr 3, 2007
    #4
  5. Jaydee

    Jaydee UKBF Regular Free Member

    Posts: 965 Likes: 249
    Perhaps this is not so in the "simple" tax that is VAT!

    The OP should refer to Business Brief 10/04 which states that even agencies which contract directly with workseekers (making them principals) could act from a VAT perspective as though they were agents - meaning that they should only charge VAT on their profit - not the full invoice value.

    Of course this assumes that the contractor is not on the OP's payroll - in which case the agency would be a principal and then charge VAT on the invoice value.
    Posted: May 9, 2008 By: Jaydee Member since: May 27, 2007
    #5