Discussion
My boss organised a Christmas lunch for a group of 20 that meet up once a month or so, we were charged £17.50 per head (No VAT.) which we paid up front. The individual people have now been invoiced through our company (£17.50)and I queried why VAT was not added. Boss has said previous Bookkeeper said you didn't have to, I'm not so sure, I think it should have been added.
Any ideas on who is right and how it should be treated.
Thanks.
Any ideas on who is right and how it should be treated.
Thanks.
Is there an element of profit in the charge you are levying to your clients?
Under VAT rules, if you can show that the bill you are raising is a mere "recharge" of a VAT exempt cost your business has incurred, then you do not have to charge VAT on the recharge bill you send to your clients/customers.
You often see such recharges on solicitors' invoices.
If you are not sure of the VAT status of the original invoice you paid, then the safest bet is to charge VAT on your recharge invoices. Your customers/clients can usually reclain this VAT in any case so they shouldn't be too concerned.
Under VAT rules, if you can show that the bill you are raising is a mere "recharge" of a VAT exempt cost your business has incurred, then you do not have to charge VAT on the recharge bill you send to your clients/customers.
You often see such recharges on solicitors' invoices.
If you are not sure of the VAT status of the original invoice you paid, then the safest bet is to charge VAT on your recharge invoices. Your customers/clients can usually reclain this VAT in any case so they shouldn't be too concerned.
Eric Mc said:
Is there an element of profit in the charge you are levying to your clients?
Under VAT rules, if you can show that the bill you are raising is a mere "recharge" of a VAT exempt cost your business has incurred, then you do not have to charge VAT on the recharge bill you send to your clients/customers.
You often see such recharges on solicitors' invoices.
If you are not sure of the VAT status of the original invoice you paid, then the safest bet is to charge VAT on your recharge invoices. Your customers/clients can usually reclain this VAT in any case so they shouldn't be too concerned.
No element of profit in our charge, we charged our clients what we paid, the only reason we weren't charged VAT is because the business that provided the lunch is not VAT registered, as we are, I presumed we would have to charge VAT.Under VAT rules, if you can show that the bill you are raising is a mere "recharge" of a VAT exempt cost your business has incurred, then you do not have to charge VAT on the recharge bill you send to your clients/customers.
You often see such recharges on solicitors' invoices.
If you are not sure of the VAT status of the original invoice you paid, then the safest bet is to charge VAT on your recharge invoices. Your customers/clients can usually reclain this VAT in any case so they shouldn't be too concerned.
I doubt whether any of the clients (All Joe Public.) would be able to reclaim it, if it is chargeable then I will re-jig the figures in Sage to show £15.21 + VAT.
It is usually the safest option to charge the VAT.
Just because the entity you urchased the service from wasn't VAT registered themselves doesn't always obviate the requirement for you to charge VAT to your customers.
This area can get tricky and can be costly if you go for the wrong option.
Just because the entity you urchased the service from wasn't VAT registered themselves doesn't always obviate the requirement for you to charge VAT to your customers.
This area can get tricky and can be costly if you go for the wrong option.
Bear in mind that if you charge £15.21 + VAT you will end up paying 2.29 per head to the government that you shouldn't have done.
Basically you will end up paying £45.80 for that meal.
Maybe not a big deal... up to you.
I would put it into Sage as T0/T9/Twhatever you use for zero-rated tax's.
The only thing you could possibly charge them (if you insist on charging VAT) would be £20.13 (£17.50 + 15%) to make it all work etc.
It is up to you how you do it, but, as previously mentioned you should just pass it on with no VAT (well, that is what I would do anyway!!)
Cheers
The Moose
Basically you will end up paying £45.80 for that meal.
Maybe not a big deal... up to you.
I would put it into Sage as T0/T9/Twhatever you use for zero-rated tax's.
The only thing you could possibly charge them (if you insist on charging VAT) would be £20.13 (£17.50 + 15%) to make it all work etc.
It is up to you how you do it, but, as previously mentioned you should just pass it on with no VAT (well, that is what I would do anyway!!)
Cheers
The Moose
Eric Mc said:
Moose, the OP won't pay the VAT to the government, his customers will. He is just a tax collecting agent.
I understand that - that is the problem I mean!! If he has paid £17.50 per head (20 heads), he has shelled out £350.If he then charges his clients £15.21 + VAT, he will keep £304.20 and pass onto the government (as, like you and I know a tax collecting agent) £45.80.
In total he would have this:
Inbound: £350.00
Outbound: £395.80
Leaving a "loss" of £45.80 if you see what I mean - which infact is tax collected and sent off to the government.
Cheers
The Moose
He should charge his clients £17.50 - thereby properly recovering his costs and not making a loss on the transaction. He would add his VAT on top of the £17.50 - thereby ensuring the VAT man gets his rightful bit. It is his customer who loses out - unless the customer is VAT registered in which case he can reclaim the VAT he has just been charged.
Eric Mc said:
He should charge his clients £17.50 - thereby properly recovering his costs and not making a loss on the transaction. He would add his VAT on top of the £17.50 - thereby ensuring the VAT man gets his rightful bit. It is his customer who loses out - unless the customer is VAT registered in which case he can reclaim the VAT he has just been charged.
It would seem we are discussing the same side here!! That was my point exactly!!! :-)Invoices were raised post payment of £17.50, there is no way they would now be asked for the extra £2.62 so my options are:
A) Leave it as it is, invoice showing £17.50 0 VAT, when the inspector picks it up (And you know they will.) Will we then have to pay the VAT because it should have been charged.
B) Tweak the figures now, to show £15.21 + 15% VAT My boss would rather suffer the £45.80 and know that it has been accounted for it properly.
Whichever option I go for I need to tell boss for next time, collect everyones money up front and pay for the meal at the end, don't involve the business!
A) Leave it as it is, invoice showing £17.50 0 VAT, when the inspector picks it up (And you know they will.) Will we then have to pay the VAT because it should have been charged.
B) Tweak the figures now, to show £15.21 + 15% VAT My boss would rather suffer the £45.80 and know that it has been accounted for it properly.
Whichever option I go for I need to tell boss for next time, collect everyones money up front and pay for the meal at the end, don't involve the business!
Eric Mc said:
I hadn't realised you had already invoiced your clients.
Is the total of the "undeclared" VAT significant i.e over £2,000?
I doubt it, although it could add up as a trip to the Nurburgring was organised just before I joined, I'll have to check if that was accounted for in the same way.Is the total of the "undeclared" VAT significant i.e over £2,000?
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