Reimbursing Exes and VAT
Discussion
I have had a search through postings but didn't see the answer to my specific question and I hope someone can clear up a question for me...
My sub-contractor had to buy a few small items to complete a job for me and subsequently sticks in an invoice for the work and also an expenses claim. Do the items in the expenses claim from him need to have vat added on or can these be treated differently to his invoice for the services supplied?
My sub-contractor had to buy a few small items to complete a job for me and subsequently sticks in an invoice for the work and also an expenses claim. Do the items in the expenses claim from him need to have vat added on or can these be treated differently to his invoice for the services supplied?
Right.
The answer is -
If he is recharging these expenses by including them on his invoice to you, then he should be charging VAT on the full value of the invoice he raises (inclusive of these "expense" amounts). It is up to him to decide whether he just recharges the exact amount of the expenses he incurred or whether he wants to add on any sort of a profit mark-up on these expenses.
Whatever he does, he needs to charge VAT on the full value of his invoice. On the assumption thbat you are VAT registered too, you will be able to reclaim the VAT on your VAT return.
An example of the way his bill would look -
Labour - £1,000.00
Expenses - £200.00
Total Net - £1,200.00
VAT at 17.5% - £210.00
Total VAT Inclusive - £1,410.00
You can reclaim the VAT of £210.00.
The answer is -
If he is recharging these expenses by including them on his invoice to you, then he should be charging VAT on the full value of the invoice he raises (inclusive of these "expense" amounts). It is up to him to decide whether he just recharges the exact amount of the expenses he incurred or whether he wants to add on any sort of a profit mark-up on these expenses.
Whatever he does, he needs to charge VAT on the full value of his invoice. On the assumption thbat you are VAT registered too, you will be able to reclaim the VAT on your VAT return.
An example of the way his bill would look -
Labour - £1,000.00
Expenses - £200.00
Total Net - £1,200.00
VAT at 17.5% - £210.00
Total VAT Inclusive - £1,410.00
You can reclaim the VAT of £210.00.
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