# VAT on invoiced expenses?



## GG001 (26 Sep 2006)

I am newly self employed. I will be invoicing a fee for services and also charging for expenses incurred for travel and accommodation. I understand that I must register for VAT if I am going to exceed € 27,500 in services. I am not sure if I register for Vat whether I should be charging Vat on the expenses portion of my invoice. Can anyone please confirm? Thanks.


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## liteweight (26 Sep 2006)

VAT should not be charged on expenses.


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## Tenacious (26 Sep 2006)

You should only be invoicing for work carried out.


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## liteweight (26 Sep 2006)

Tenacious said:


> You should only be invoicing for work carried out.



Expenses are invoiced too. Just calculate the vat on the service portion and add expenses at the end.


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## Dee (26 Sep 2006)

AFAIK if you are sending an invoice with only the expenses on it you do not charge vat but if the expenses are on the invoice with the service charge you do charge vat.


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## GG001 (26 Sep 2006)

Great help, thanks to everyone. Much Obliged.


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## liteweight (26 Sep 2006)

Dee said:


> AFAIK if you are sending an invoice with only the expenses on it you do not charge vat but if the expenses are on the invoice with the service charge you do charge vat.



This is incorrect as far as I'm aware.


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## col (26 Sep 2006)

Go to a small local accountant firm for advise.Vat is a complicated area and for €100 they will set you on the right track.


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## Kiddo (27 Sep 2006)

Yes you can charge the vat on expenses. Any accountancy practice I have worked in have always included expenses in the vat calculation on their fee invoices. 

I have just checked our audit fee for the year and the expenses incurred are included for Vat purposes....we use one of the Big 4 firms.


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## liteweight (28 Sep 2006)

I had a VAT audit last year and was told by the person doing the audit that I should not have charged VAT on expenses. So where does that leave us?


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## Pegasus (28 Sep 2006)

Are you both talking about the same kind of expenses?


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## liteweight (28 Sep 2006)

Pegasus said:


> Are you both talking about the same kind of expenses?



Thought of that last night after I'd posted. I'm talking about travel and subsistence, which the OP was asking about.


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## Kiddo (28 Sep 2006)

liteweight said:


> Thought of that last night after I'd posted. I'm talking about travel and subsistence, which the OP was asking about.


 
I'm talking about travel & subsistance too. 

I know solicitors don't charge vat on "outlays" such as photocopying etc

Its very puzzling alright 

The only thing I can think of re accountancy practices charging vat is that 99% of their clients are vat registered, so can reclaim the vat..therefore the net effect to the exchequer is nil? 

Are you invoicing vat registered customers?


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## liteweight (28 Sep 2006)

Some are VAT registered and some (education) aren't. Whether they are or not, we still have to charge VAT. The one's who aren't registered kick up because it takes them so long to reclaim it. They used to complain bitterly that they shouldn't be charged. I clarified it with the Revenue who told me that legally, once I'm registered, I have to charge. I was told that the only thing I don't need to charge VAT on are expenses.


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## ubiquitous (29 Sep 2006)

liteweight said:


> I had a VAT audit last year and was told by the person doing the audit that I should not have charged VAT on expenses. So where does that leave us?



This guidance appears to be incorrect. This would lead me to question the basis behind the inspector's other findings during the audit, if they did not have a strong grasp of the technical issues arising. Did you consult an accountant during or following the audit?


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## liteweight (29 Sep 2006)

ubiquitous said:


> This guidance appears to be incorrect. This would lead me to question the basis behind the inspector's other findings during the audit, if they did not have a strong grasp of the technical issues arising. Did you consult an accountant during or following the audit?



Yes. He was the one who charged VAT on expenses. Now he says that was incorrect and we should do as the Inspector says. The audit was a pretty painless experience, as it's not a big company, and thankfully we're honest!!


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## ubiquitous (29 Sep 2006)

I see. Sometimes it is more practical to agree with an Inspector for the sake of the quiet life. Especially when there are no tax liabilities at stake.


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## Pegasus (29 Sep 2006)

A search of revenue.ie threw up this:

http://www.revenue.ie/services/foi/s16_2001/chap_10.pdf  section 10.5

http://www.revenue.ie/services/foi/s16_2001/chap_05.pdf section 5.15.4

Seems to specifically for accountants,solicitors, estate agents etc.
It’s old but gives an idea.

What I read from it is if one of the specified professionals incur a cost on behalf of a client eg company office fees or computer software, they don’t have to charge the client vat but they can if they choose to do it that way.

Motor and travel expenses incurred in carrying out your work is not on behalf of client (because of but not on behalf of) and you should charge vat when passing it on. The reason for showing it separately is to clearly show that the invoice amount is not all fees.


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## liteweight (29 Sep 2006)

ubiquitous said:


> I see. Sometimes it is more practical to agree with an Inspector for the sake of the quiet life. Especially when there are no tax liabilities at stake.



I agree. I was a nervous wreck when it came to the audit but I knew our books were very straightforward and we hadn't done anything wrong. Still I worried about them finding something I was unaware of. The expenses were the only thing (only 2 invoices with expenses for audit purposes). Seriously, I felt like a criminal about to be found out!

From the OP above it seems you were right Ubiquitous, as was the accountant originally. I don't know what to do now!!


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