Application of VAT

paulr

Good morning,
a subcontractor who is a HGV driver invoices weekly;
he is Vat registered and levies standard rate on his Labour hours;
he also gets paid £20 a night for overnight allowance which is exempt from Income Tax and not charged VAT;
however his Accountant is telling him that the total invoice value should be levied at 20%;
which is correct?
thanks,
Paul.

KernowAccountant

paulr said:

Good morning,
a subcontractor who is a HGV driver invoices weekly;
he is Vat registered and levies standard rate on his Labour hours;
he also gets paid £20 a night for overnight allowance which is exempt from Income Tax and not charged VAT;
however his Accountant is telling him that the total invoice value should be levied at 20%;
which is correct?
thanks,
Paul.

As the driver is a self-employed individual, why do you believe the £20/night "allowance" to be exempt from Income Tax?

paulr

overnight allowances are exempt

KernowAccountant

paulr said:

overnight allowances are exempt

Are they really?!? Please provide a legislative reference for that... because I don't believe you!