Limited Company expenses

Limited Company expenses

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Hi,

I have a client who is Contractor working through his Limited Company.

He has recently paid for significant expenses out of his own pocket and has asked his client to reimburse them back into his Limited company.

Should he get the expenses paid directly back to himself and thus avoid going through his Limited company or should he invoice the client for expenses at the same time as invoicing for his services?

What are the advantages and disadvantages of the two approaches?

Thanks

Louise

 
 

Replies (8)

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By johngroganjga
04th Mar 2015 11:24

Provided the company reimburses him for the expenditure in question then end result is the same in each case.

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By NHGlos
04th Mar 2015 11:29

Or...

...he could use his directors loan account, particularly if it's as big as you suggest.

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Replying to Cheshire:
By johngroganjga
04th Mar 2015 11:34

Reimbursement

NHGlos wrote:

...he could use his directors loan account, particularly if it's as big as you suggest.

How is using the DLA not reimbursement, and what information is there in the question to show how big the balance on it is?

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Replying to kestrepo:
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By NHGlos
04th Mar 2015 12:10

Am I being cross examined?

johngroganjga wrote:

NHGlos wrote:

...he could use his directors loan account, particularly if it's as big as you suggest.

How is using the DLA not reimbursement, and what information is there in the question to show how big the balance on it is?

I didn't say it wasn't a reimbursement, the "big as you suggest" was in reference to the "significant" expenses. The OP has some uncertainty on the approach to take, as per the description of the replies I made a technical  "comment" - AKA a suggestion.

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By Chipette
04th Mar 2015 11:31

Invoice client company

I may have misunderstood the question but shouldn't the Ltd co invoice the client company for recharged expenses in any case?

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Replying to Cheshire:
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By andy.partridge
04th Mar 2015 14:16

Agree 100%

Chipette wrote:

I may have misunderstood the question but shouldn't the Ltd co invoice the client company for recharged expenses in any case?

Anything else is confusing. I wouldn't recommend breaking the (illusion of) supplier and client relationship and act like an employee. Who knows where that could lead.
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Replying to Paula@Butt:
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By sparkler
04th Mar 2015 14:02

I agree too!

andy.partridge wrote:

Chipette wrote:

I may have misunderstood the question but shouldn't the Ltd co invoice the client company for recharged expenses in any case?

Anything else is confusing. I wouldn't recommend breaking the (illusion) of supplier and client relationship and act like an employee. Who knows where that could lead.

Absolutely. Director incurs expense and submits expense claim to limited company, who reimburse him.

Limited company then invoice client for agreed expenses (plus VAT of course if VAT-registered).

Anything else would be very confusing, and would make the director appear to be an employee of the end-client. 

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By LTPBC
04th Mar 2015 22:10

Thanks for the comments. I will advise client to recharge expenses via his company invoices to help avoid the possibility of him looking like a pseudo employee. 

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