Recharging expenses occurs when you ‘recharge’ your expenses to your customer eg travel fare or hotel bills.Note that recharges are not disbursements.
If you are VAT-registered, there are VAT consequences to be aware of when processing recharges.
Using three expenses:
- You were charged £100 + £20 VAT (for perhaps hotel accommodation);
- You were charged £30 and zero VAT (eg for travel).
- You agreed 45p per mile travelled with your customer, and you did 50 miles.
| Expenses | Recharge to vatable and/or UK/EU customer: | Recharge to non-vatable and/or non-EU customer: | |
| a | £100 + £20 VAT | Net £100
VAT £20 |
Net £100
VAT n/a or £0 |
| b | £30 and £0 VAT | Net £30
VAT £6 |
Net £30
VAT n/a or £0 |
| c | £22.50 | Net £22.50
VAT £4.50 |
Net £22.50
VAT n/a or £0 |
If you are not VAT-registered, you simply pass on the total charge to the customer.
If you have any questions or comments about the above, you may post below for assistance.
Good easy to understand explanation.
Posted by FraukeG | January 1, 2018, 11:38 amThank you, Frauke. Happy new year.
Posted by Phoenix | January 1, 2018, 2:24 pm