Allowable Expenses

T.C.

I am a bit confused....it doesn't take much!
I have a new client who works as a consultant. He invoices his customer once a month and includes costs that they have agreed to pay, which include "coffee and cakes" amongst other things. Now usually I would disallow these, but as they are paid as part of his invoice, can he claim them??? :001_unsure:

MarieNoelle

If he paid for them and the client agrees to reimburse these expenses, then I would put them down as "cost of sales".
I would like to hear others comments on this though.

reader

T.C. wrote: »

I am a bit confused....it doesn't take much!
I have a new client who works as a consultant. He invoices his customer once a month and includes costs that they have agreed to pay, which include "coffee and cakes" amongst other things. Now usually I would disallow these, but as they are paid as part of his invoice, can he claim them??? :001_unsure:

I would post the sales invoice as normal, i.e. DR Debtors + CR Sales/CR Output VAT.

Then I would post the "coffee and cakes", i.e. DR Travel and Subsistence and CR Cash (bank/petty cash/DLA).

Where were you going to post the "coffee and cakes"? Entertainment? DLA? I'm sure if you ask your client he/she will say it's just travel & subsistence.

"cost of sales" is another alternative (because you can directly trace back the expenditure to the individual sales invoice).

T.C.

Thanks. I think 'cost of sales' makes most sense. :001_smile:

burg

I would be tempted to put as refreshments. The purpose of these are not to entertain but simply to provide refreshments, I presume at meetings. It's just the same as us providing tea/coffee and/or cake/biscuits when I clients comes to see us.
We aren't entertaining them as the purpose is to discuss accounts/tax.

T.C.

No, they are expenses of "coffee and biscuits" for himself!

MarieNoelle

Hi T.C.
If these expenses relate to subsistence while working away or at the client's premises then I would post as Reader suggested. Otherwise cost of sales should be fine.