VAT on Business Expenses (travel + hotel)

[Perenius]

Hi All

I have a Limited company. We are VAT registered - flat rate scheme.

Last week I did some jobs for a client which required me to travel and stay in hotel. I am specifically talking about train tickets and hotel bill.

I need to invoice the client for my fees + VAT, and also add the above mentioned costs to the invoice. I am not sure whether I should charge VAT on them.

The total hotel cost was £126, but that includes £21 VAT, i.e. charged by the hotel.

The total train fare was £326. I don't know if this includes any VAT as the train ticket does not show it.

I should be most grateful if you could help me make this invoice.

Regards

P

 

[talkinpeace]

No VAT on train fares for you to reclaim
BUT
by recharging it, you are providing the service of your time so it should be fees plus costs then total, plus VAT
to give the same effect as an all in price

 

[Perenius]

Hi there

Thanks for trying to help.

I am not sure I understand what you are trying to explain. Do you mean?

Our service fees £150
Train fare £326
Hotel £101 (i.e. excluding the VAT)
TOTAL £577
VAT on total - £115.40
Invoice total including VAT - £692.40

I was thinking about doing it like this:

Our service fee - £150
VAT on our fee - £30
Our fee + VAT - £180

Train Fare - £326
Hotel - £126 (not sure if this should be £101 or £126)

Invoice total - £632

 

[talkinpeace]

you have to charge VAT on the whole of the service you provide

same as VAT reg traders have to charge VAT on postage

in your case the service includes getting to where you did the work

 

[Perenius]

It doesn't make sense to me. Do I have to apply VAT to the train fare?

 

[talkinpeace]

Think of your fee for the job as an all inclusive one including getting you there
and the VAT goes on top of that.

 

[Perenius]

That's interesting.

Thanks

P

 

[ART Accounting]

You need to bill them as follows;

Fees - £150
Train - £326
Hotel - £101
Total (net) - £577
VAT - £115.40
Total (gross) - £692.40

 

[SBlundell]

You need to bill them as follows;

Fees - £150
Train - £326
Hotel - £101
Total (net) - £577
VAT - £115.40
Total (gross) - £692.40

Agreed, ART is right here. Relevant HMRC VAT guidance here http://www.hmrc.gov.uk/vat/managing/charging/disbursements.htm, specifically "What isn't a disbursement for VAT purposes"

You recharge the costs (obviously subject to your agreement with the customer) net of VAT, then total fees, costs & everything else to give your net sub-total & then VAT on everything in one go.

Hope that helps