A client is a director of a VAT-registered company.
On occasion he will also act as an unpaid, independent chairman of another company's internal working group. He is not connected with this separate company in any way except that they send him an honorarium, ex-gratia, towards travel costs.
The amount given never covers actual costs (which means it fails HMRC's rules on "what is a disbursement") but is automatically sent out after the meeting has occurred.
I will need to record the money when it comes in but the client has stated he does not want to raise a VAT invoice. He is happy to declare the income and also to lose money on the commitment but he doesn't want to incur an extra tax liability for putting himself out for what is really a personal ideal.
Can I do anything other than raise a T9 proforma invoice upon its receipt? (Sage 2011)
That's how I've told him it should be accounted for: as personal income. He's not persuaded, though. I believe he volunteered and was accepted for the work because of his tech knowledge and experience, not because of his company.
His company supports a lot of charitable and ethical work and he regards this as a continuation of it. If he's adamant it should go through the company, It's difficult to see how we can avoid raising a service invoice for it - except by the method I mentioned.
Andy
(Edit to clarify the volunteering)
-- Edited by AICB on Tuesday 15th of November 2011 10:38:46 PM
Other than reinforce that this is how it should be handled, I don't see much more you can do. In my opinion, you've told him how to do it, he's said no. Another option might be for him to refuse to take the payment.
Yes, thanks Kris, He's a genuinely altruistic nice guy and worth ensuring that he doesn't run foul of any regs. I'll work it out with him somehow. Andy
