Sorry if this has already been covered; I couldn’t find it among other posts…
I run a VAT registered LTD company through which I sell my services as a consultant. Sometimes I work for my clients from their sites; sometimes from my home. On occasion I use my home telephone to make calls as part of client work.
Naturally, I then invoice my clients for these calls (as client billable expenses). As a CONSUMER my phone bill includes VAT which I pay personally to the phone company. As an EMPLOYEE of my company, I then create an expense claim from my company (as a Purchase) for the full amount of the call including VAT which, as a domestic consumer, I had to pay.
Meanwhile, the itemised bill I receive from the phone company shows calls, numbers, times, duration, and a charge for each call which INCLUDES VAT. The monthly service charge also includes VAT. Consequently, the bill, when totalled up by the phone supplier does not add a VAT total to the call totals and service.
So far so good…
My question is: If I invoice my clients for each call I make for them and provide them with the evidence (i.e. itemised call list from my bill), I will be claiming for an amount that includes VAT. When drafting my company invoice to my client, I am asked whether to include VAT at 20%, 0% etc.
On the one hand, it seems that if I choose 20%, then I’m charging VAT on VAT. On the other hand, as a consumer I have to pay the VAT to my phone company which means that the call cost + VAT is a true “INPUT” cost to my company and consequently reflected in my personal expense claim to the company. I’m under the impression that I should charge clients VAT on the full cost (in this case a personal expense) of such an input (which included VAT).
Pretty protracted and convoluted question, but I hope it makes sense!
Can anyone advise please?