Discussion
Can someone please clarify the scenario below please.
Contractor on standard rate vat scheme incurs hotel room cost of £120 gross which they claim back from client.
Net cost is £100 and contractor claims back £20 from HMRC and recharges £100 + VAT.
Similarly same contractor also incures train fare of £100 gross but as it is 0 rates there is no VAT to reclaim but on recharge the contractor has to add VAT to invoice. Total cost £120.
Correct yes?
How does this scenario replay for the flat rate scheme?
Contractor on standard rate vat scheme incurs hotel room cost of £120 gross which they claim back from client.
Net cost is £100 and contractor claims back £20 from HMRC and recharges £100 + VAT.
Similarly same contractor also incures train fare of £100 gross but as it is 0 rates there is no VAT to reclaim but on recharge the contractor has to add VAT to invoice. Total cost £120.
Correct yes?
How does this scenario replay for the flat rate scheme?
sumo69 said:
The "moral" position on the expense charge is that you should be recharging £100 + VAT as the FRS is benefitting you by retaining some of the VAT on sales to offset the loss on any potential reclaim on your costs.
However, legally you can charge whatever you like so long as your client is willing to pay!
David
Yup, this was my opinion too. Thanks for the clarity.However, legally you can charge whatever you like so long as your client is willing to pay!
David
Thanks all
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