A client always gives me a spreadsheet with an expense breakdown inc mileage, lunch receipts, parking tickets, etc. that they have paid for personally, they then write themselves a cheque from the business a/c to pay these back. How do I deal with the expense receipts received and can they claim the VAT back on them?
You need to debit the appropriate expense accounts i.e. travel & subsistence etc, and credit your clients directors loan/drawings account. You will then be able to match the bank payment paying these expenses back to the client, by crediting the bank and debiting the directors loan/drawings account.
If the client is VAT registered then yes you would be able to claim back the VAT as normal. For mileage you do need a VAT receipt covering the period the mileage was claimed.
I know people have asked before but when claiming mileage, my client claims 40p per mile and 10p of that as VAT. How would I input that and does it need to match up to petrol receipts?
Your client must hold a VAT receipt in support of all their mileage claims, and the receipt can cover more than one mileage claim. A claim cannot be supported by a VAT receipt that is dated after the dates covered by a claim, and the amounts on the receipt must at least be equal to the VAT being recovered on business mileage. For example to calculate the VAT on mileage, if your client did 250 miles @ 40 pence per mile (where the fuel element is 10 pence) the VAT would be 250 x 10 pence x7/47 = £3.72. The accounting treatment of this is: Debit the Motor Expenses Account with £96.28, Debit the Vat Account with £3.72, and Credit the relevant Bank, Directors Loan or Drawings account etc with £100. Fay
