VAT on train fare

[dwspritchard]

I run an IT consultancy and I've been charging a client for my time £X per day, I'm also charging them for my train journey to their site £Y, as well as £Z for my accomodation. I've being producing invoices to them charging vat on X+Y+Z.

I've recently received a call from them saying they can't pay the VAT on the train fare (Y). Have I been calculating the VAT incorrectly? If so what would be the calculation I should use

Looking forward to your help.
D

 

[DuaneJackson]

I'm not an accountant but....

If you are VAT registered you have to charge VAT on everything you invoice them for at the appropriate rate. Regardless of whether or not you paid VAT on the initial purchase.

I'm sure one of the accountants will correct me if I am wrong.

 

[dwspritchard]

Hi Duane,

thanks for the quick reply thats what I thought also, but the message they left me said they couldn't pay the VAT on the train fare and I'd need to reinvoice them. Sounds like I need to check with them and my accountant to find out what the problem is.

regards
Deryck

 

[geoff]

Hi Deryck,

To the best of my knowledge, in the UK you are not charged VAT when you pay for a train ticket. I guess this is why your client is not accepting the VAT being added and passed on to the client to pay, because you didn't pay VAT for the ticket in the first place.

regards

Geoff

 

[bwglaw]

You need to put train fares down as disbursements and your time as fees ie.

Fee £100.00
Disbursement £20.00

VAT on £100 at 17.5% = £117.50, total due £137.50

I await to be corrected!

Jonathan

 

[Alpha]

Not really sure what their problem is but perhaps it is a slight misunderstanding.

Train fares are normally zero rated therefore there is no vat to claim back, however you have invoiced them for the travel that you have incurred and charged vat (correctly) which they can then claim back.

The train fares are not supplied to your customer by the railway company they are an integral part of your service and therfore you have to charge vat onthe supply.

Note a similar situation occurs if you recharge postage!

 

[Alpha]

You need to put train fares down as disbursements and your time as fees ie.

Fee £100.00
Disbursement £20.00

VAT on £100 at 17.5% = £117.50, total due £137.50

I await to be corrected!

Jonathan

Duly Corrected

 

[Kent Accountant]

A full explanation is in para 25.1 of the VAT Guide (Notice 700). The link is http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageLibrary_ShowContent&id=HMCE_CL_001596&propertyType=document#P2401_197529

 

[dwspritchard]

Thanks all for the responses, I now feel more knowledgable with regards to the calculations/processes to contact the client's accounts department and discuss the matter further.

Kind regards
Deryck

 

[Cornish Steve]

The train fares are not supplied to your customer by the railway company they are an integral part of your service and therfore you have to charge vat onthe supply.

Geez. The government taxes you every which way.

 

[Donnash]

What was the amount of VAT on the train fare? I'm supprised any client is that picky