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VAT on staff reimbursed expenses

VAT on staff reimbursed expenses

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We have a LinkedIn subscription for our Company. As a UK VAT registered company, and with LinkedIn being based/registered in Ireland, we provide them with our company VAT reg no. and we do not get charged VAT. We just account for the VAT under the reverse charge system. The cost of the month sub is £58.32

One of our employees also has a LinkedIn sales navigator pro monthly subscription which they are charged £58.32 + £11.66 VAT.

The Company has agreed to reimburse the cost of this sub to the employee. 

What is the companies position with regards to the £11.66 VAT that has been charged to the employee?

- Can we claim is back in full?  N: £58.32 V:£11.66 G:£69.98

- Do we reverse charge the full amount  inc VAT (£69.98) ?  

 

Replies (18)

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chips_at_mattersey
By Les Howard
22nd Oct 2019 14:17

My view:
1. You cannot claim Irish VAT via a UK VAT Return.
2. You have to use the gross invoice value for your Reverse a Charge calculation.

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RLI
By lionofludesch
22nd Oct 2019 18:13

The very fact that he's being charged VAT means that the supply is to him and not to the company. Which is another reason you can't claim.

"Who is supplying what to whom ?"

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Replying to lionofludesch:
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By timcbaker
23rd Oct 2019 09:02

Thanks! do I still reverse charge the gross amount though... or do I treat it as a supply from the employee (UK non VAT registered) and an exempt supply?

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By Brend201
24th Oct 2019 10:12

I'm not sure that the other answers are correct.
The VAT of £11.66 is exactly 20% of the net amount £58.32.
The rate of VAT in Ireland is 23% so LinkedIn are not charging Irish VAT.
Check the VAT number that is shown on their invoice. If it is a UK number, I would claim the VAT on your UK return, even if it is addressed to the individual - the amount is small.

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Replying to Brend201:
RLI
By lionofludesch
24th Oct 2019 10:28

Small makes it OK ?

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By C Graham
24th Oct 2019 10:51

I would move the subscription to the vat registered company -presumably as a valid expense claim it is used for the benefit of the company anyway.
As Brend201 says, this is not Irish vat so I would check the vat number on the invoices

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By timcbaker
24th Oct 2019 11:00

VAT No is: IE9740425P
We want to keep the sub in the employees name, rather than the Companies (don't ask me why!)

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By ChrisKM
24th Oct 2019 11:01

I would imagine Irish co is charging VAT at UK rates via Irish VAT MOSS as their customer (the employee) is UK based and not a business.

My understanding has always been that, although the VAT is being charged at a UK rate, this VAT cannot be reclaimed on a UK VAT return.

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Replying to ChrisKM:
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By C Graham
24th Oct 2019 11:57

Possible but if MOSS is used, why would the company's own subscription be subject to reverse charge? Can a company with a MOSS also use the reverse charge scheme - Anyone know?
But otherwise looks like the employee will take the vat hit and the company reimburses the net which is weird as if it is a valid business expense then the company should be the name with the subscription anyway.

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Replying to C Graham:
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By timcbaker
24th Oct 2019 12:08

I assume B2B is reverse charge and B2C is MOSS.
We are going to reimburse the employee the full amount they incurred (inc the 20% VAT)
I am just wondering from the company's PoV... do I reverse charge the full amount (inc VAT) or treat as an exempt supply ?

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Replying to timcbaker:
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By C Graham
24th Oct 2019 13:30

Yes B2B and B2C makes sense.

So seems the vat element cannot be recovered. The only way the employee might get around this is to keep the subscription and log in in his/her name but give the company vat number for billing. If the amount is then deducted from a credit card set up on the account, it should be treated as B2B supply as in theory there is nothing to stop a personal card being used as payment method for a company subscription. Though if I am wrong I am sure someone here will put me right on that.

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By ChrisKM
24th Oct 2019 12:08

Your company is a business. They supply Linkin with their UK VAT number, Linkin then charge no VAT and the company must use the reverse charge. VAT MOSS is not used for B2B.

The employee is not a business. Linkin must therefore charge the employee VAT via VAT Moss (as the sub is a B2C digital service ).

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Replying to ChrisKM:
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By timcbaker
24th Oct 2019 12:38

Thanks - yeah I agree with that.
When it comes to processing the Staff expenses form for their LI sub do I reverse charge the total amount the employee incurred (inc the 20% VAT) or treat as an exempt supply?

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Replying to timcbaker:
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By ChrisKM
24th Oct 2019 13:07

To be safe, you could just reverse charge the gross amount.

I don't think there is a definitive answer to this as a reverse charge applies on B2B transactions and as far as LI are concerned this was B2C although your company might consider it B2B.

Unless you are partially exempt it won’t make a difference to your VAT liability.

[Willing to be contradicted on this though].

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By The Dullard
24th Oct 2019 13:59

The gross amount is just additional pay, against which the employee can claim a corresponding expense. It's outside the scope, and not worth fuching about with quite frankly.

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Replying to The Dullard:
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By C Graham
24th Oct 2019 16:35

it's not outside the scope as EU entity but it is such a small amount - may as well reimburse the full amount as expense claim

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Replying to C Graham:
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By The Dullard
24th Oct 2019 16:48

It is outside the scope, because you're just paying additional remuneration to an employee (who happens to have been the recipient of a supply from an EU entity, that is related to the amount of that additional remuneration).

The employer has not received any supply, other than the employees services, which is an outside the scope supply, because the employee is not in business (something the 6th directive is explicit on).

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Replying to The Dullard:
RLI
By lionofludesch
24th Oct 2019 17:27

Agree with Dulls. There's no supply for VAT purposes of any kind to the company because the contract is with the employee.

Which is where the initial problem lies.

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