Allowable Expenses

T.C.
T.C. Registered, Tutor Posts: 1,448
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:

Comments

  • MarieNoelle
    MarieNoelle Moderator, MAAT, AAT Licensed Accountant Posts: 1,369
    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
    reader MAAT, AAT Licensed Accountant Posts: 1,037
    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.
    T.C. Registered, Tutor Posts: 1,448
    Thanks. I think 'cost of sales' makes most sense. :001_smile:
  • burg
    burg Moderator, FMAAT, AAT Licensed Accountant Posts: 1,441
    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.
    Regards,

    Burg
  • T.C.
    T.C. Registered, Tutor Posts: 1,448
    No, they are expenses of "coffee and biscuits" for himself!
  • MarieNoelle
    MarieNoelle Moderator, MAAT, AAT Licensed Accountant Posts: 1,369
    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.
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