Geezer

Dunno if anyone can answer this, but....

A company is sub contracted by another company to do some work. An employee of the sub contractor is required to undertake travel on behalf of the main company. The put their expense claim in to the company they work for, and they have paid VAT already, and they are claiming the whole amount back, but the company is VAT registered and can claim the VAT back. SO far so good. The company then submits a claim to the company they are sub contracted to, and adds VAT to that claim, so in effect, the VAT is being claimed twice. IS that right?

Another example, the sub contractor sub contracts some other work, and they are quoted for the work including VAT. They then charge the main company (the one they are sub contracted to) that same amount, exclusive of VAT, so again, they are charging VAT on something that has already been quoted inclusive of VAT. Is that correct?

I hope that make sense!

BlkKnight

I'm not sure that the middle company can claim the expenses passed on via the sub contractor as the subby is not VAT registered.

The subby's invoice to the middle company will state parts / labour / travel with no mention of VAT?

Are the original (vatable) expenses in the subbys name or that of the middle company?

Geezer

In the first example, the person making the claim is an employee of the sub contractor.

In the second, the a privately owned business submits an invoice to the sub contracting company for services, and includes VAT in the total. The sub contracting company then charges the company they are subcontracting to that amount (so inccuding the VAT) and then charges them VAT again.

BlkKnight

Just for clarification:

Employee (E) is an employee of Subcontractor (S) Main Company is stand alone (M)

Let me get this right.

The E pays for fuel which to travel to M. The S claims back the VAT & the fuel on the expense. The S then raises an invoice to M for the Fuel, Labour & VAT?

Is that the case, or am i miss reading it?

GWJ

The E submits expenses to S as per normal. End of responsibility as far as E is concerned. S will then invoice M for the job in whatever manner they do. Or is that too simple?

300gnspitzer

If a company is not VAT registered they have to charge their customer the price including the VAT, but not shown, so therefore not reclaimable.

GWJ

Yes.

Geezer

E submits claim to S for £100, for example. That £100 is inclusive of VAT. S then charges M £100 + 20% VAT. I do not know if S is VAT registered or not, but M certainly will be.

In second example. P (private contractor) invoices S for a job, £100. That £100 has VAT included. S then invoices M for £100 + 20% VAT. In this example I do not know if P is VAT registered. So, I suppose the answer(s) I am looking for is:

What if P and S are VAT registered?
What if only S is VAT registered?
What if neither is VAT registered?

This stems from a real life situation, and we wondered whether someone was bein ripped off, or we just do not know how claiming VAT works?

GWJ

Think of them as separate transactions.


This is how I would do it


Lets assume its for fuel for which E will have a till receipt


E claims fuel of £100 from S
S reimburses E
S puts fuel receipt into his own accounts system.
S invoices M for job of which £100 is for fuel, if you want to play fair and break down the £100 fuel down with VAT do so when creating invoice for M
If not invoice whatever you want to, depends on what arrangements are with M


Generally speaking M would not be interested in the breakdown of expenses etc, not his problem. All he wants to know is total price for the job agreed

GWJ

Or..... E could just be reimbursed by M directly if its that much of a headache?


Its giving me one ..lol

BlkKnight

In a nutshell, sounds like they are going it OK.

VAT is ultimately paid by the final person in the chain (the consumer). Businesses just pay the difference on VAT between their buying and selling price.

Frosty The Snowman

Sounds like disbursements to me, VAT should be claimed by the subcontractor and charge the main company the net travel cost without VAT added.

https://www.gov.uk/guidance/vat-cost...d-to-customers

BlkKnight

Depends if the subcontractor was an employee or not

Frosty The Snowman

The subcontractor in this case is a company and it is the employee of this company making the expense claims, as per first post.