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vat on food and drink

villapbvillapb Trusted RegularRegistered Posts: 357
Hi Guys and gals.
Im not mip but work in a practise and will post questions on things i come across in the day for general information for myself and others who may read the q and a.
Today i had to allocate a load and i mean a load of receipts for a contractor from his sub contractors. There were quite a few for food and drink, ranging from one guy for £5ish upto 4guys together for £25on the evening having a meal out. The guys work long hours, the contractor pays their food and accomm when out of town.
What vat can be claimed back and what should the contractor be paying regards a food allowance so its not a benefit in kind, im sure its £5 a day. The guys with the £25 bill could look like a office party situation, but im not sure on £5 for macdonalds lol, so im sure hmrc wouldnt allow it as an office party.
Id be interested to see any answers and compare them to what i was told to do today..........i m clear on the expense situation but not sure regards vat.

Comments

  • readerreader Experienced Mentor MAAT, AAT Licensed Accountant Posts: 1,042
    villapb wrote: »
    Hi Guys and gals.
    Im not mip but work in a practise and will post questions on things i come across in the day for general information for myself and others who may read the q and a.
    Today i had to allocate a load and i mean a load of receipts for a contractor from his sub contractors. There were quite a few for food and drink, ranging from one guy for £5ish upto 4guys together for £25on the evening having a meal out. The guys work long hours, the contractor pays their food and accomm when out of town.
    What vat can be claimed back and what should the contractor be paying regards a food allowance so its not a benefit in kind, im sure its £5 a day. The guys with the £25 bill could look like a office party situation, but im not sure on £5 for macdonalds lol, so im sure hmrc wouldnt allow it as an office party.
    Id be interested to see any answers and compare them to what i was told to do today..........i m clear on the expense situation but not sure regards vat.

    Generally a business can reclaim VAT on travel and subsistence expenses such as travel, meals and accommodation if the business pays for these costs in part or in full and the director/partner/sole proprietor/employee/subcontractor is away from their normal place of work on a business trip. A business cannot reclaim VAT on travel and subsistence expenses when it pays its employees a flat rate for subsistence expenses.

    http://www.hmrc.gov.uk/vat/managing/reclaiming/travel-subs.htm

    Input VAT shouldn't be claimed when wining and dining (i.e. entertaining) a client; however it should be reclaimed when staff are being entertained:

    http://www.hmrc.gov.uk/vat/managing/reclaiming/entertainment.htm
  • readerreader Experienced Mentor MAAT, AAT Licensed Accountant Posts: 1,042
    The incidental overnight expense allowance is £5/night when the person remains in the UK and £10/night when they are outside of the UK:

    http://www.hmrc.gov.uk/manuals/nimmanual/nim06025.htm

    The incidental overnight expense allowance is a provision for items such as private telephone calls, laundry services and newspapers:

    http://www.hmrc.gov.uk/manuals/nimmanual/nim06015.htm
  • groundygroundy Trusted Regular Registered Posts: 495
    Are we not missing the point!

    If they are subcontractors they should not be claiming anything for subsistence unless it is added to their sales invoice.

    If they are employees then they should be submitting weekly or monthly expense claim forms with VAT receipts attached.
  • villapbvillapb Trusted Regular Registered Posts: 357
    Cheers reader, i must read the hmrc site more.
    Ill just clarify this with my senior guy, i think groundy has a point but that could get really complicated.
    The guys are technically self employed employees going out to venues to do a job where the base can regarded as their normal place of work. ie carpet layers at exhibitions all over the country and europe. The business trip is what i need to clarify and the normal place of work...........gets a bit fuzzy.
  • readerreader Experienced Mentor MAAT, AAT Licensed Accountant Posts: 1,042
    groundy wrote: »
    Are we not missing the point!

    If they are subcontractors they should not be claiming anything for subsistence unless it is added to their sales invoice.

    If they are employees then they should be submitting weekly or monthly expense claim forms with VAT receipts attached.

    Who is an employee for VAT travel and subsistence purposes

    You can only reclaim VAT on travel and subsistence expenses for your employees.
    Your employees can include the following people:

    a person directly employed by you
    directors, partners or anyone else that is managing your business
    self employed people - subsistence expenses only - who are treated as normal employees

    http://www.hmrc.gov.uk/vat/managing/reclaiming/travel-subs.htm
  • groundygroundy Trusted Regular Registered Posts: 495
    villapb wrote: »
    The guys are technically self employed employees

    No such thing as a self employed employee. If I was you I would strongly suggest a review of the procedures in place to ensure these individuals are correctly self employed. If HMRC were to visit and deem them employees it could be very costly for the contractor
  • villapbvillapb Trusted Regular Registered Posts: 357
    Just a fiqure of speech old chap..................they employ on a self employed basis due to the nature of the work, ie courier companies, construction companies. You come across as not such much trying to help but a bit of know it all, the worst kind of accountant in my experience...........the contracts they work on are various in size and nature.
  • villapbvillapb Trusted Regular Registered Posts: 357
    Maybe tad harsh...................my comment.
  • deanshepherddeanshepherd Font Of All Knowledge Registered Posts: 1,809
    I think HMRC often use the term 'worker' when they refer to the self-employed but on whom they want to apply a few employee rules. Happens in a lot of sectors. Many people in TV pay NIC as if they were employed but pay tax as if they were self-employed - who said tax doesn't have to be taxing?!
  • groundygroundy Trusted Regular Registered Posts: 495
    villapb wrote: »
    You come across as not such much trying to help but a bit of know it all, the worst kind of accountant in my experience

    I am sorry if I offended you and I am by no means a no it all and never intend to come across that way. I was trying to help as we have had some clients have bad experiences lately with HMRC when using self employed contractors and therefore I was offering advice from my experience.

    I have asked advice on here and from time to time I offer advice when I can to help, however this is the first time I have had this sort of reaction so once again I apologies but yes your comments were harsh.
  • groundygroundy Trusted Regular Registered Posts: 495
    The point I was trying to make without sounding like a smart arse is that paying subcontractors expenses based on receipts would imply in a small way an employee relationship. Due to the fact that a self employed person would add those expenses to his weekly/monthly invoice if agreed with contractor.

    Therefore the concern of whether these individuals were to be treated as employed rather than is a greater tax concern than a small VAT error.

    Apologies once again if I came across smug and good luck sorting through the receipts.
  • PGMPGM Font Of All Knowledge Registered Posts: 1,954
    groundy wrote: »
    I am sorry if I offended you and I am by no means a no it all and never intend to come across that way. I was trying to help as we have had some clients have bad experiences lately with HMRC when using self employed contractors and therefore I was offering advice from my experience.

    I'll vouch for you groundy, I've found you very helpful. But on forums its so easy to come accross the wrong way by mistake.
  • villapbvillapb Trusted Regular Registered Posts: 357
    Sorry groundy, should have counted to ten..........ooppps.
  • groundygroundy Trusted Regular Registered Posts: 495
    No problem
  • PAMDILLPAMDILL Experienced Mentor Registered Posts: 716
    I was in the situation about 10 years ago in a construction company when a very nice man at HMRC paid a visit and decided 90% or our subbies should be classed as employed for the time they were working on our site, cost a fortune in NIC etc. This was even for drystone wallers who were brought up from Wales for a week or so a time for one site. Tiler who was brought in for 1 property at a time. All of them had submitted quotes and issued invoices. Can you imagine the paperwork involved doing that, new employee set up everytime used, P45 issued every time job finished!!

    Supposedly this was the start of a big purge of construction companies, surprisingly I have not heard of anyother companies being hit, even though many of the bigger companies have hardly any employees on the books - per site maybe an agent and a forklift driver, all the rest subbies.
  • villapbvillapb Trusted Regular Registered Posts: 357
    Cirkey thats a unreal, i know IT contractors got hit and people in office on contracts ie a draughtsman using cad etc.
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