Hi
We just had an employee complete a job for a customer, which involved 500 miles of travel. I know how to process the Mileage Allowance Payments for the employee, with appropriate VAT treatment.

What I am not sure of is how to show it on the Invoice to the customer.
Would it be best to split the travel expenses into two lines, one for the non-VAT component, and one for the VAT inclusive component?
Or is there some better way?

Mike B

Hi Mike,

As I understand it, you need to apply VAT to the full amount you charge your customers, irrespective of the VAT you have paid on your expenses. However, I'm not a VAT expert on this - I recommend you check this with HMRC on 0845 010 9000.

Regards,

Thanks Mark, great support as usual!

From what I understand having battled through the VAT maze, it turns out that since this is part of the core services we provide, we need to invoice the customer for the MAP amount excl VAT, plus any additional margin we want to add, and then charge the customer VAT on that total amount.

But now I do have some further questions re staff expenses.
On the same trip this member of staff also had to pay a parking fee, and buy themselves a meal, both of which we can charge to the customer, and I have done so on the customer's invoice.

My questions are in terms of how to record those expenses in Solar to be able to reimburse the member of staff, at some point in the near future.

1. Should we do that as if the meal and the parking fee were separate purchases to different suppliers for the company by the member of staff (and set up a liability account for those purchases, similar to the Directors Loan, liability account), and then when we reimburse the member of staff record it as a general transaction from the Cheque Account to the member of staff's expenses liability account?

Or should we hold off entering the expense details into Solar until we actually reimburse the member of staff? I would prefer not to do that, simply because I'd rather have the details in Solar, to remind me that we do need to reimburse the member of staff.

2. Do we have to record each and every expense staff incur on business travel as separate purchases to individual suppliers? Or could we set up a placeholder supplier account (e.g. client incurred expenses), and simply create a single itemised payment to that supplier account, with all the items in the expense claim for the trip?

Many thanks again

Hi Mike,

Glad to hear you like our support! To answer your questions:

1. Your staff member is effectively giving you a small loan and paying expenses on your behalf. Record the expenses as soon as you are aware that your staff member has incurred them. This would involve creating a new liability account as you describe. You would pay from this account when the expenses are incurred, and you would pay into the account when the staff member is reimbursed.

2. Solar Accounts will allow you to record a single transaction to cover many expenses, and you could create a new expense account for this purpose. However, you should check that this is acceptable to your client, accountant and tax office.

Regards,