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Rechargeable Expenses - Paid for by your Client

Most business expenses are normal business "overheads" - such as travel to your client site or food whilst away.  Generally these come out of the company's own "pocket" and are not directly paid for by the client.

However, you may incur expense costs that ARE reimbursed directly by the client.  For example your client pays for a day's work PLUS a refund of an expense such as a Flight or a Hotel.


How do you record Rechargeable Expenses?

These expenses need to be recorded in two places.

Record the "sales" - You must add the chargeable expenses to your sales invoice for the client so that you can account for the income.  Please note that if you are VAT registered you still have have to charge VAT on these expenses.  In very rare cases you do not have to charge VAT.  Please ask us for assistance.

Record the "expense /purchase".  So that your company is not taxed on this part of the income you must add the purchase to Tempo just like a normal expense that is not chargeable.


Do I add VAT onto my expenses when charging the client?

If you are VAT registered then Yes.  You must always add VAT on to your invoices.

2 Examples:

  • You are re-charging for a hotel bill which you paid £100+VAT for.  You should charge £100 and 20% VAT to your client.
  • You are re-charging for a train fair which was £25 (and there is no VAT on the receipt).  You should still charge £25 and 20% VAT.


To summarise

The only real difference between a chargable expense (that the client pays for) and a normal expense (not paid for by client) is that you need to add the expense item to a "sales invoice" (to account for the income) as well as a normal expense entry.