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Client asking for receipts for expenses with invoice?

Discussion in 'Accounts & Finance' started by Matt-LW, Jul 11, 2018.

  1. Matt-LW

    Matt-LW UKBF Contributor Free Member

    80 1
    Hi,

    Hopefully a quick question i'm looking for some help with:

    I have one client that sends out a Purchase Order for the agreed amount, and the asks for receipts for any expenses (Like food or car parking). As a subcontractor I don't really want to have the hassle of sending over copies and not to mention would expect to add a small margin to cover the additional time spent accounting for....

    Anyway, question is: How would HMRC view a subcontractor sending in receipts and billing the same amount on? Could that fall foul of been viewed as an employee (or a tick in that box in a wider view??)?

    Thx

    m
     
    Posted: Jul 11, 2018 By: Matt-LW Member since: Dec 17, 2012
    #1
  2. Newchodge

    Newchodge UKBF Big Shot Free Member

    9,114 2,318
    You quote a price. It is entirely your business and no-one else's if you have paid car parking or not, unless you show that charge separately on your invoice. Which may not be sensible. Even if you do show it, unless your contract states that you will charge for certain costs at the cost to you, it is perfectly acceptable to pay 50p for parking and charge £1.00. Tell them to mind their own business, in the nicest possible way.
     
    Posted: Jul 11, 2018 By: Newchodge Member since: Nov 8, 2012
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  3. Matt-LW

    Matt-LW UKBF Contributor Free Member

    80 1
    Unfortunately in my line of work no one asks for a quote, they know (or have a rough) idea of your 'day rate', which unsurprisingly everyone's is fairly similar... Some companies will sort out things like travel costs and add it in to the fee on the PO, some will say bill what it costs (that means they don't have to spend time working it out in advance), as long as it's reasonable.

    And unfortunately sub-contracted labour is often treated as part time employees (by such small companies), probably because the employees don't know any better and all they know.

    So yes the point of my asking was to find a polite way of saying 'mind your own' e.g. if HMRC would take a dim view that would be a good way.
     
    Last edited: Jul 11, 2018
    Posted: Jul 11, 2018 By: Matt-LW Member since: Dec 17, 2012
    #3
  4. Newchodge

    Newchodge UKBF Big Shot Free Member

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    Are you, in reality, an employee?
     
    Posted: Jul 11, 2018 By: Newchodge Member since: Nov 8, 2012
    #4
  5. Matt-LW

    Matt-LW UKBF Contributor Free Member

    80 1
    That is a question I regularly ask myself, but not what I asked or require comment on here (whole other question that and not what I am concerned with within the context of this thread, so apologies if that's a little blunt).

    m
     
    Posted: Jul 11, 2018 By: Matt-LW Member since: Dec 17, 2012
    #5
  6. Newchodge

    Newchodge UKBF Big Shot Free Member

    9,114 2,318
    You're in a public orum. You don't contol comment.
     
    Posted: Jul 11, 2018 By: Newchodge Member since: Nov 8, 2012
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  7. Ken Moorhouse

    Ken Moorhouse UKBF Contributor Free Member

    80 4
    Are you registered for VAT?

    If not, just wondering whether your customer is using your receipts to claim VAT back, which sounds naughty to me if they are. I take it you always use your company name on any receipts for stuff you sell on? Otherwise it might look like a Petty Cash Voucher submitted by an employee of theirs.
     
    Posted: Jul 11, 2018 By: Ken Moorhouse Member since: Jul 2, 2018
    #7
  8. paulears

    paulears UKBF Big Shot Full Member

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    That's what I was thinking - you can't include a receipt that you need if you've handed it to the 3rd party. You provide them with your invoice, which details your expenditure - so if they agree to pay this kind of thing - what's their beef, unless it's VAT. Maybe you could provide them a separate invoice for the out of pocket expenditure.

    In my case, the client picks up the cost of fuel used to go to a dictated venue, plus they pay for subsistence like hotel if we paid for it, and a contribution for food - so we invoice £25 for food - even if we don't have time to eat. The actual receipts are irrelevant, and we keep those for our accounts.
     
    Posted: Jul 11, 2018 By: paulears Member since: Jan 7, 2015
    #8
  9. Matt-LW

    Matt-LW UKBF Contributor Free Member

    80 1
    Cyndy, your welcome to post what you like, and I appreciate your input, but if its irrelevant to the question asked, so whats the point?? Just saying an apologies if a little blunt. I could type many many pages on the employment status subject, but that not what this question was about.

    ta
     
    Posted: Jul 11, 2018 By: Matt-LW Member since: Dec 17, 2012
    #9
  10. Matt-LW

    Matt-LW UKBF Contributor Free Member

    80 1
    Yes I am VAT registered.

    Client is not using the receipts to claim back VAT, just to check up on what people are billing them for for things like food and taxi's, as they would an employee I would hazard a guess at.

    What I always find interesting is that I charge the full receipt amount and then put VAT on the total, no one (across several client that ask the same) have ever questioned that, which give me a very small 'fee for the hassle'. Which is another pointer it's as 'treat as an employee thing'...

    Nothing sold on, this is purely for things like taxi's, food, maybe hotel rooms (if someone has messed up the booking and it needs paying there and then) etc. that are expected to be billed back to the client.

    Paul. I think we are in a similar or the same industry. Some clients just want to see evidence with expense claims, I've not problem with that for anything out of the ordinary, but things like car parking, food etc one has to cover on the spot and then bill on, which that have a fairly good idea what the cost will be, is just a PITA to administer (and slows down sending out invoices...

    And yes, I keep my receipts, they go in my accounts / VAT account for my records (never had anyone expect to take the originals).

    Yes I do the same as you, just got one client that asks for receipts for PD's.. which prompted my question, I don't do enough work for them to worry that much (usually a couple of repeat jobs a year and a few one off's when they are busy..).

    Ta

    m
     
    Posted: Jul 11, 2018 By: Matt-LW Member since: Dec 17, 2012
    #10
  11. Alan

    Alan UKBF Legend Full Member - Verified Business

    5,827 1,604
    Just tell them ( bluntly if you like :) ) that you will not provide the receipts, to protect them from any HMRC investigation which could infer you are an employee, in which case they retrospectively could become liable for Employee NI etc, so you are doing them a favour protecting them.
     
    Posted: Jul 11, 2018 By: Alan Member since: Aug 16, 2011
    #11
  12. Gecko001

    Gecko001 UKBF Enthusiast Free Member

    2,480 386
    This client might have been caught out by a previous contractor over-charging on expenses. Once bitten, twice shy.

    I see nothing wrong with giving them receipts or other proof of your costs. I actually do not see it as generally acceptable to add a little for admin to expenses unless agreed with the client, even if you are self employed. Exceptions are perhaps printing on your own printer. Then you could charge the going rate for getting them done say at professional printers and not just for the paper and ink used. Another exception is perhaps not passing on your customer discount to the client

    PS. You could just say no to the client's request, but obviously you risk losing a client.
     
    Posted: Jul 11, 2018 By: Gecko001 Member since: Apr 21, 2011
    #12
  13. paulears

    paulears UKBF Big Shot Full Member

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    When I am looking at maybe well over a grand for expenses paid, but not going to be recouped for at least a month after the invoice date, sensible adjustments are just like any other business expense. If I am invoicing for perhaps three people's contribution to a project, I do not invoice what I actually receive an invoice from the other person? If they invoice me £180, plus VAT, I'm likely to charge that at £240 + VAT If I can source something at a special rate, why would I pass that on - any additional margin is fine if the end product is still competitive.

    Matt and I's world is a little odd in how it runs - one of my regular and very large clients got a new accountant. I had to do more petty cash spreadsheet returns than usual, because he wanted to track expenditure more closely than the old one - so weekly for ten weeks, but an extra one every time I requested more cash. He wasn't happy with one entry's description which was vague. Groundsman's unexpected supply. I changed it to inducement to groundsman. INDUCEMENT - more details, immediately! I changed it again to Bribe to groundsman, £200 in ten pound notes in a white envelope on Christmas Eve for the unofficial loan of an electric golf cart, including delivery and collection. He told me he would be calling the Chairman immediately. The Chairman worked out what was going on in a flash, and that was that sorted! At an HMRC inspection a few years back, there were two questions. What had I done with £400 in cash taken from my personal bank account each week. "I gave it to a Romanian dwarf who couldn't have a UK bank account" and the other question was why I had bought 25 pairs of M&S white ladies pants. That was another story.
     
    Posted: Jul 12, 2018 By: paulears Member since: Jan 7, 2015
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  14. Chris Ashdown

    Chris Ashdown UKBF Legend Free Member

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    You don't do much work for them so i guess not many receipts , so on each of these jobs why not just take a photo of the recept as you get them and then forward them with invoice, maybe a minute every invoice

    We used to state that, "any incidental costs outside the normal contract, would be charged at cost plus 25%", and never had any complaints
     
    Posted: Jul 12, 2018 By: Chris Ashdown Member since: Dec 7, 2003
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  15. Gecko001

    Gecko001 UKBF Enthusiast Free Member

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    The OP did not say that these "expenses" included work done by sub-contractors or self-employed people. This must be a very special industry working in another dimension if "expenses" on an invoice include these costs!! You certainly will want to add your mark up to them, even 100% if you can get it. Your mark up in those cases should certainly not be disclosed to anybody, especially your client.
     
    Posted: Jul 12, 2018 By: Gecko001 Member since: Apr 21, 2011
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  16. Ken Moorhouse

    Ken Moorhouse UKBF Contributor Free Member

    80 4
    As I understand it there may be areas where marking-up ancillary costs could be of interest to HMRC. For example a company exempt from VAT for whatever reason could be considered non-exempt because of these mark-ups, and (if this is the case, perhaps an accountant could confirm?) such entities should therefore rigorously match all expenses against their corresponding recharges.
     
    Posted: Jul 12, 2018 By: Ken Moorhouse Member since: Jul 2, 2018
    #16
  17. Matt-LW

    Matt-LW UKBF Contributor Free Member

    80 1
    Thanks for all the replies, good to get other peoples view etc and on subjects like this interesting to see how some people view things (as in treating sub-contractors as employees..).

    Haven't really found the answer I was looking for yet, had hopped there would be a good argument for HMRC viewing the practice I mentioned in a dim light....

    The problem with my industry (as one of the first posts highlighted) is that most sub-contract labour is indeed really just disguised part-time/casual labour..(in my view) all be it very skilled... It's the way it works and until the tax man clocks on and has a look (so small an industry in the grand scheme of things they probably won't ever bother). And it is indeed very out of the 'normal' in the way things work etc as Paul mentions. The arrangement as it is generally works for both suppliers and companies and most people who are just providing labour keep mouth shut and accept it, because it works for them.

    So most companies deal with there sub-contractors, providing only labour services, more as employees than anything else.... Which is where my bug bare is as I sit on both sides of the fence. I supply labour only to lots of clients, some I provide labour and equipment and I also provide services (as in the equipment and the labour). So I get frustrated when some clients treat 'Freelancers; (case in point, I've just had an email reply to a PO query, from the same company saying ' We don't PO for a day and a half, just in case it doesn't go that long and we still get billed for it...' .........).

    Taking photos of receipts is fine, but when a 'day' is generally at least 10-12hours on site, quite often on your feet all the time... not usually a 'proper' lunch break etc then the last thing I am thinking about is taking a picture of a receipt as I'm getting lunch... Do it when I get home? I guess, but when its a choice between 4 or 5 hours sleep or doing some admin, I bet you can guess which it is.
    And while it is a fairly simple thing to take pictures and send them over, if my receipts are at the office for instance and I am on the train, or in a hotel away from home trying to catch up on some admin, then that delays sending out invoices which hen delays payments (because 30 days is always a goal, not a limit....). The times I'm working for these sort of companies is always when it's busy (why would you use sub-contracted labour when it's quiet and your employees are available...!).

    Not to mention the bigger question of should a bonafied sub-contractor not be in a position to add a small margin to cover there costs: things like time, credit fees, and god forbid a 'profit margin'. My biggest bugbear been this are companies that off course are charging every last thing out to there clients and adding a profit margin, they don't sub-hire equipment, charge out at cost and show there end clients receipts... now do they.........

    They may have been burnt before, but I don't think it is that as the PO's say something along the line of 'PD's: up to £20 with receipts submitted' So they wont accept a claim above what they have budgeted (and presumably charged on to there client). All a bit of having your cake and eating it too.... (imo)


    Gecko001 These 'Expenses' are generally the way it works so these companies don't have to ask sub-contractor's for a quote each time they book someone. These are companies with very dynamic labour and skills requirements, some moths, like now, are full on busy and sometimes are dead quiet and tick over...

    They know what individuals charge as a 'day rate' so can easily work out multiples of that and estimate costs for food (away from home and quite often in places where food is at a premium and certainly nowhere to heat up a tin of beans etc), travel to site, parking etc to work out there costs without asking each person for a quote and waiting for it to come back (that would also require giving out details of the job, most of the time info received is day, location and time to be there.. *cough* employee?? *cough*.....i know... )

    Not to mention that most people half decent at there job would want to work for a single company

    m
     
    Posted: Jul 13, 2018 By: Matt-LW Member since: Dec 17, 2012
    #17
  18. Gecko001

    Gecko001 UKBF Enthusiast Free Member

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    OK I think I see what the situation is now. If you have a client who wants to see receipts for expenses such as food and carparking incurred by the labour you supply, it causes you hassle and you want to charge for this hassle by adding an admin % onto the expenses on your invoices. That might work but by actually putting it on an invoice as an admin cost related directly to having to send expense receipts what you are doing is telling your client that full transparency regarding expenses costs you extra. Surely that will seem very suspicious to any client. I would try to cover you costs in sending receipts in other ways such as increasing your mark-up on items on the invoice such as labour costs.
     
    Posted: Jul 14, 2018 By: Gecko001 Member since: Apr 21, 2011
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  19. Matt-LW

    Matt-LW UKBF Contributor Free Member

    80 1
    It's not that I want to charge an admin fee, I just don't want the overhead of having to sort and send copies of receipts, simple as that... (I'm not a paperwork person.. slows down invoicing and I do my receipts quarterly when I sort the VAT return out).

    And to be totally honest I don't always keep food receipts, if it's say £5.00 in Tesco for lunch i'm not going to bother trying to put that through my accounts So if I can bill it on as £7 or £8 that covers me for carrying the credit for 30+ days and the tax on it.

    Anyway the original question started with my looking for a good reason for saying 'not sending you receipt copies', if HMRC would take a dim view of and there was a unanimous consensus on that then that would be a good argument to put forward.

    But it also raised the similar question in my mind of: Should a Bonafied Sub-Contractor ever be asked to provide receipts for expenses.

    I have no issue at all if it's for something out of the ordinary and more than a trivial cost, for instance if I have to go to screwfix and pickup some supply's in an emergency. But things like food or putting fuel in a van that can easily be estimated and are expected... Obviously there is a big grey area that muddies the waters because the majority of Sub-Contractors are in-fact disguised employees (imo) and everyone is kidding themselves in my industry.

    At the end of the day it's a problem of small company mentality, used to dealing with employees as it is employees dealing with crewing and accounts, trying to eeak every penny out of every job and thinking they can push around there Sub-Contractors because people generally want the work so wont rock the boat and are generally happy to put up with (or don't actually know any better) the arrangement. Those at the bottom of the food chain are the easiest to push around.

    m
     
    Posted: Jul 14, 2018 By: Matt-LW Member since: Dec 17, 2012
    #19
  20. Chris Ashdown

    Chris Ashdown UKBF Legend Free Member

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    Why would the company pay for your food?, I can understand travel and accomodation, but anything else I would have thought is your responsibility after all if not employed then you would still buy your own food. For employees it is often accepted as all costs but as a ex freelancer we never go food thrown in
     
    Posted: Jul 14, 2018 By: Chris Ashdown Member since: Dec 7, 2003
    #20