OK, so a limited company contractor has an contract with a large banking group. As part of the contract, the contractor has to spend a couple of nights in a hotel and it has been agreed that the banking group will cover these. The contractor company is VAT registered under the flat rate scheme. The question is: How does the contractor invoice for this without taking a VAT hit? For example, if the hotel cost was £120 total then would he invoice for £100 plus VAT? This would then increase his FRS turnover by £120 and he would need to pay £17.40 to HMRC. As he is on the FRS he cannot reclaim the VAT. I giess really he should invoice for £120 plus VAT but I can't see the client agreeing to this. Any thoughts?
17th Aug 2012 14:34