VAT on expenses
I have a friend who has set up as a sole trader (not vat registered) and incurred expenses during his first month of work. He will reimburse himself from his company bank account as soon as it is set up and his first payment is received. The expenses are for travel and accommodation and include an element of VAT. He will reimburse himself the whole amount from his company bank account as soon as it is set up and his first payment is received. His main client is tax exempt due to charity status and his contract from them states he will be paid expenses at cost. The cost to him includes VAT. Should he charge them the full amount or the amount less VAT?