Thorny issues

Paula Veysey Smith • 9 April 2018

So, with Easter over I’ve decided to do a series of “thorny questions”! OK, I know you want to switch off now but don’t because the issues raised are important and . . . . . I have thrown a random question into the blog and the first to email me the correct answer will receive a prize – yes, you really will, so please continue reading.

I’m going to take a couple of issues that often crop up when I speak with clients. This week we’re going to look at rechargeable expenses with specific reference to the VAT treatment. I know, you all can’t wait to read on – if only for the prize.

So, rechargeable expenses are reasonably easy until you get to the VAT treatment. If you incur an expense on behalf of a client you can recharge this to them – simples. If you add a mark up, which is business savy, the amount you pay will be less than the amount you charge so you will have a profit which will incur tax, whether that is corporation or self assessment. However, it gets a little bit more complicated when you have to consider VAT.

The basic rule is that the VAT liability on recharged expenses follows the liability of the main supply of the goods and services – in other words you should be charging VAT whether or not the original invoice had VAT on it, or not, if you get my drift.

Confused – well, I would be too if I was you!

So, you need to distinguish recharged expenses from disbursements. HMRC allow disbursements to be passed on without adding VAT, but there are a lot of conditions to pass to use this caveat.
A disbursement is basically an expense you pay on behalf of your customer as agent, it is an amount the customer has the obligation to pay and you are authorised by the customer to pay it on their behalf. In this case you do not need to add VAT.

Question – which elephants have the biggest ears, African or Indian? See, didn’t leave it to the end just in case people just scrolled down!

With a recharge, you would normally add VAT to the gross amount ie a hotel bill for £100 plus £20 VAT, you recharge the customer £120 plus VAT. However if it is a disbursement you would not have to add the VAT. It all depends what is in the contracts and whether the expense passes the HMRC rule.

So, the bottom line is that if your customers are VAT registered then it makes little difference. Make sure you are clear on what is an expense or disbursement, and it is a very fine line. If you have any questions on this please do get in touch.

Next week we’ll look at motoring expenses – so get your skateboards out…

R is for Reward

by Paula Veysey-Smith • 8 July 2026
The finish line isn't just a destination. It's proof of everything you put in to get there. “Nothing feels so good as when you've succeeded at something you set out to do.” We made it. Seven letters, seven posts, and one very important journey. If you've been following this series from the beginning, you'll know that back in January we started with a goal — a triathlon in July. And as I write this, sitting in the garden with an iced coffee and a medal around my neck, I can tell you: it happened.  R is for Reward. And it might just be my favourite letter of the lot.

E is for Evaluate

by Paula Veysey-Smith • 8 July 2026
Setting a goal is just the beginning. What keeps it alive — and keeps you moving towards it — is what you do in between. “Evaluating what you're doing is so important. What worked, what didn't, what can I do better?” We're six letters into the SMARTER framework now. We've covered Specific, Measurable, Achievable, Relevant and Time-bound. Today we reach E for Evaluate — and I'll be honest with you, I think this might be the most important letter of the lot.

T is for Time-Bound

by Paula Veysey-Smith • 26 June 2026
A goal without a deadline is just a wish with good intentions. Here's why putting a date on it changes everything. “Having that end date is something that gives you the enthusiasm, the commitment, and the motivation to continue.” We're now on T in the SMARTER Goals series - and this one is beautifully simple. T stands for Time-Bound, or Targets. It means giving your goal an end date.

R is for Relevant

by Paula Veysey-Smith • 26 June 2026
Short-term goals are more powerful when they're built towards something bigger. Here’s why relevance is what keeps you going when motivation dips. “Goals that are shorter term in nature, but built to a bigger vision, are the most motivating that you can get” So far in this series we've looked at S for Specific, M for Measurable, and A for Achievable. Now we come to R for Relevant -- and this one is about making sure your goals are connected to something that genuinely matters to you.
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