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Train fare and VAT

Train fare and VAT

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Could someone please advise whether I am right in thinking this

I have a friend whom works in consultancy and he goes from site to site for his clients, he incurs train fare costs of which are zero rated therefore he obviously does not get the VAT back however when he invoices his customers is he right to put his services down, then mileage if any, then train fare and this total is then invoiced with VAT on?? As he surely should pay VAT on all of this? Or am I not right in saying this. His clients are saying that he cannot charge them the VAT element on train fare however they have not been charged by the rail company they have been charged by him for his costs and services??

Any advice would be great

Replies (10)

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06th Mar 2013 16:53

If he's the one travelling by train ...

... then the train fares are just an element of his costs. However he chooses to describe them, if he re-charges them to his clients then he needs to add VAT. It would be different if his clients were travelling with him and he was buying their tickets on their behalf.

So, stand your ground - you are correct.

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By Constantly Confused
06th Mar 2013 16:57

As I understand it

VAT should be charged.  Your friend isn't charging his customers for train fare, he is charging them an extra fee to cover his train fare.

#Edit# (no puppies this time I promise)

Started to type before I saw BKDs response, so what he said!

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06th Mar 2013 16:56
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By George Attazder
06th Mar 2013 17:12

And another one

Again I agree on the train fare.

Looking at it another way though, if also incurred a £120 hotel bill (£100 + VAT), then he would charge the net £100 as his expense (unless he'd agreed with clients otherwise), even if he actually used the Flat Rate Scheme.

As you say (and others), he isn't supplying rail travel (or hotel accommodation), he's supplying consultancy services and the consideration for those services is the bill total (the same as for P&P and charges levied for paying by credit card).

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By andy.partridge
06th Mar 2013 17:13


How wonderful - you don't often get this in AnyAnswers.

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By law man
08th Mar 2013 12:02

Agreed, but a way round

When a lawyer agrees with the accountants, you wonder ............

As commentators say: zero rated supply by train operator to consultant, and standard rated supply by consultant to client.

I believe there is no VAT if:

(1) client buys a ticket from train operator: zero rated suppply

(2) client gives the ticket to the consultant for use in travel in the client's business.

However, check this is still correct.





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By Nat5elbs
08th Mar 2013 12:18

Thank you all very much. This has helped a great deal

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By Bob Davies
08th Mar 2013 12:37

Train fare and VAT

I do not fully agree with Law Man I would expect a challenge because in this day and age and HMRC approach to what appear to be minor matters to extract the last penny.  Their argument being that it is now a barter transaction the client is actually paying the invoiced fee plus the cost of a travel ticket that was needed to attend to the client.

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By shaun king
08th Mar 2013 18:19

Train Fare VAT

Bob I would agree with you and disagree with Lawman. The supply of the train travel is to the consultant in the first instance and not the ultimate customer. So the train fare becomes a cost component of the overall supply and is subject to the standard rate. What you have in the instance quoted by Lawman is 3rd party consideration for the supply.

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Replying to Portia Nina Levin:
By thesoraj
20th Aug 2015 14:51

Consultant can charge VAT on train fare

An example of an invoice showing disbursements and recharges

A website design consultant based in London does a week’s work for a client in Edinburgh. The consultant visits the client’s premises at the start of the week to discuss the project. The consultant also agrees to purchase a website hosting package from an Internet service provider on behalf of the client.

The consultant and the client agree the following fees:

ActivityFeeConsultant’s work£2,500 plus VATConsultant’s travelling expenses£300Website hosting package purchased on the client’s behalf£150

The £300 travel cost that the consultant recharges to the client is not a disbursement so the consultant must charge VAT on it. But the cost of the website hosting package is a disbursement and can be excluded from the VAT calculation, because:

it was purchased for the use of the clientthe client agreed that the consultant would arrange and pay for it on their behalf - this means the consultant agreed to act as the client’s agentthe consultant passed the whole £150 charge on to the client, without adding anything, as a separate item on the invoiceit was the client’s responsibility to pay for the goodsthe consultant had permission from his client to make the paymentthe client knew the web hosting package was from another supplier and not from the consultantthe consultant showed the costs separately in the invoicethe web hosting package paid for by the consultant is additional to the other services being billed to the client

The consultant’s invoice to their client for this work might include the following items:

design services - £2,500travelling expenses - £300amount on which VAT is due - £2,800VAT at 20% - £560disbursements - £150total including VAT - £3510


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