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Shared expenses and Vat

Volunteers travelling expenses have been paid and to be recharged. Should there be Vat?

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My business reimbursed a volunteer (he isn't Vat registered) for travelling expenses to review a play. Another company has agreed to share the travel costs. When my Vat registered business invoices this other company, do I need to charge Vat for simply sharing a cost of train fares?

 

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By paul.benny
21st Nov 2019 08:59

Train fares themselves are zero-rated, so I say no to charging VAT on sharing the expense (assuming there is no mark-up on the recharge).

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By Samtyler
21st Nov 2019 09:12

Thanks.

That's the route I was heading down given there is no mark up.

But in the wonderful world of Vat, I know things aren't always so clear cut.

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By Bobbo
21st Nov 2019 14:06

Why is this other company sharing the costs? What's their interest in the review of the play?

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By WhichTyler
21st Nov 2019 15:52

Yes you must charge VAT.

You are not providing transport service to the other company and you are not paying a bill on their behalf (aka disbursement).

as a vat registered business what would the rationale be for not charging?

This has been discussed several time here...

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By spidersong
21st Nov 2019 16:33

I suspect Which is probably right, but really you need to answer Bobbo's question.

Why are the other party paying did they just feel like throwing some money at you in which case why link it to this review/trip. If not then presumably they get something out of giving you the money, and it's that 'whatever' they get out of it that you need to define and which will decide the VAT liability, if any.

Whether train fares have VAT on or not isn't really relevant, it's what you've done for them to get this money that matters, and you're not a train operator and I assume aren't acting as an agent for them to actually take a train trip themselves so there's no real possibility you've provided a train ride to them.

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By Samtyler
21st Nov 2019 21:59

Thanks for the replies.

My company received a small grant, that was passed onto said company, and part of the reporting required volunteers to review the play and they purely claimed travel expenses as individuals. We're talking amounts under £50.

The company I wanted to charge half the costs to were responsible for putting on the play, so we wanted to pass on half of the costs of the volunteers, as this company ultimately received the grant and this reporting back to the grant funder are part of their usual requirements.

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