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Should you charge VAT on expenses?
The simple answer is that if you are selling a standard rated product or service and you incurred expenses doing that – then you must charge VAT on the expenses that you are charging to your client. If you incurred a cost on behalf of your client, that you need to pass over to them – then is a disbursement.
Can VAT be charged on services?
VAT is a tax on consumer expenditure. It is charged on goods and services which fall within the scope of VAT.
Can you charge VAT on VAT?
In general VAT must always be charged but you must not charge VAT on top of VAT. If you didn’t incur VAT on the expense, you charge VAT. If you incurred VAT on the expense, you don’t charge it again.
What is the point of reverse charge VAT?
The domestic reverse charge is commonly used to prevent missing trader fraud i.e. the supplier will charge VAT, be paid the VAT and then ‘go missing’ before they declare it to HMRC.
What is a recharge expense?
A recharge expense is one that is incurred in the process of performing one’s services, but has been agreed to be paid for by the client. A disbursement, on the other hand is an expense which you have paid on behalf of the client.
Is there VAT on a service from the UK?
If you receive services from a company based in the UK after the transition period, in general, Irish VAT will be due on the services. If you provide services to a company based in the UK, in general, UK VAT will be due on the services.
What is a VAT recharge?
VAT recharge is for businesses that provide services to other businesses which will then sell on to a consumer. It does not affect businesses who are providing a service directly to the consumer.
Who is the end user for reverse charge VAT?
An ‘end user’ is a person, business or group of businesses who receives the building and/or construction services but who will not be making an onward supply of those services.
What are company recharges?
Recharges are costs that your business incurs when supplying goods and services to your customers. It’s standard accounting practice to add VAT on to a recharged expense. Examples of a recharged expense: • Airline tickets that you buy to visit a client or to travel to a job.
What is a staff recharge?
When the purchasing company pays the staff’s wages it does do on Company A’s behalf and, therefore, the recharge is merely a request for a repayment of this disbursement. The recharge is thus outside the scope of VAT. The separate charge made for running the payroll is standard rated.
Is a recharge an expense?
What are recharges in business?
Recharges are costs that your business incurs when supplying goods and services to your customers. It’s standard accounting practice to add VAT on to a recharged expense. Examples of a recharged expense: • Airline tickets that you buy to visit a client or to travel to a job. You then pass this cost onto your customer.
Does EU reverse charge VAT still apply?
EU reverse charge after Brexit After Brexit, businesses based in Great Britain (England, Scotland, and Wales) can no longer apply the reverse charge to EU sales. However, businesses based in Northern Ireland can still apply the reverse charge as normal because they are still within the EU VAT area.
Do I have to charge VAT on services to EU customers?
If you provide services to customers outside the EU, you usually do not charge VAT. However, if the service is used in another EU country, that country can decide to charge the VAT. You may still deduct the VAT that you paid on related expenses, such as for goods or services purchased specifically to make those sales.
Why is VAT charged on goods and services?
VAT is a tax on consumer spending, so everyone who pays for goods and services pays VAT. It is built into the cost of many commonly consumed items such as clothing and petrol, so you don’t see what percentage of VAT you are paying.
Do you charge VAT on intercompany salary recharges?
Staff employed by Company A undertake work for another group company (or companies). Company A recharges the staff wages according to the amount of work undertaken. In this case the recharge of the wages is subject to VAT.
Do I have to charge VAT on costs that are recharged?
You’ll have to charge VAT on them whether you paid any VAT or not. Some examples of costs that could be recharges but are not disbursements include: an airline ticket that you buy to visit a client or to travel to a job, if you recharge the cost to your client you must charge VAT because the flight was for you, not for the client
How do I claim back the VAT on recharges?
To claim back the VAT on costs and expenses you pass on to your customers as recharges, you’ll need a valid VAT invoice or receipt for each.
What is a vat neutral recharge?
Firstly, it is to be noted that certain recharges could be completely VAT neutral due to the legal status of the entities involved. For instance, where a recharge is made by a head office to its branch (or indeed vice-versa), the transaction would typically remain outside the scope of VAT.
Do I add VAT if I recharge train fare?
You have to add VAT if you recharge train fare. “If I’m charging for a hotel, do I charge my client: The net amount (excluding VAT) from my invoice, then add standard rate back on? The gross amount (including VAT) from my invoice, then add standard rate on top?”