VAT Question

[atom111]

Hi

If I invoice a customer for expenses incurred such as a train ticket should VAT be added to that as part of the invoice. The services supplied are Vatable but I am not sure about expenses which I am listing as a sepearate item.

I am thinking not and my accountant isn't open right now so does anyone know for sure. I beleive that VAT shouldn't be charged on expenses incurred,

Thanks

[Gordon Brown]

I can't recall if public ransport is VATable anyway but the principle is that you add VAT, so:

you incur a £100 expense which you intend to pass on.

In fact it is £85.11p plus £14.89p VAT.

You charge the £100 PLUS VAT ( so £117.50p) to the customer and reclaim just the £14.89p in VAT you paid, thus Darling makes another £2.61p on the deal.

[atom111]

Thanks GB

Train ticket is not vatable but from what you are saying it does seem I still add vat so darling get's an extra nibble on something that originally didn't have vat as I am in affect selling it on albeit at cost.

[Eric Mc]

Yes, you have to add on VAT to the bill - no matter what the original cost was and no matter what way it was treated for VAT purposes by the original supplier.
Public transport businesses were specifically exempted from VAT when VAT was set up in in the UK 1973. You have to remember that, back then, many public transport organisations were actually state owned, so them charging VAT would have been tantamount to the government taxing itself.
Exmaples of state owned public transport companies in 1973 would be -
British Rail
British European Airways (BEA)
BOAC
National Bus

For the sake of fairness, the non-government owned public transport companies of the day were also exempted from VAT.

That is also the reason why Royal Mail does not charge VAT on postal serrvices.

All these exemptions apply to the actual supplier of the original service.
You, as an ordinary VAT trader, cannot avail of the exemptions and must charge VAT on your invoices - even if the invoice is solely or partly raised by you in an effort to recover these costs.

In certain circumstances, invoices raised recovering VAT exempted costs can be raised without charging VAT. You would need to look up the circumstances where these situations arise. Solicitors tend to use this technique when recovering Stamp Duty and Search Fees from their clients. Garages can do the same when they are recovering MOT charges from their customers.

[atom111]

Thanks too all for the replies that has really helped put it square in my mind.