Client is VAT registered Company A) and subcontracts to a company (Company B).
Company A is paid for labour and work + VAT from company B, no problems there. Company A also claims expenses incurred from company B, which they pay them, inclusive of VAT.
So on the VAT return, first one is due Jan 7th, is box 1 labour VAT PLUS VAT received from company B regarding expenses?
Apologies, I can't quite seem to get my head around this one.
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Company A expenses is kind of a double entry with the end result being any vat due to hmrc.
Company A purchase expense and vat in the usual boxes.
Then company A issues an invoice for expenses to company B so again net sales and vat in the usual boxes.
Company A reclaims vat on actual expense but declares vat on payment for those expenses. Difference if any would be vat due to hmrc.