hi
Could someone clear up a query I have regarding how Flat Rate VAT scheme applies to this scenario involving a IT personal service company. I'm sure this is a really stupid question, but I can't seem to get a clear answer.
I read that Flat Rate of VAT is applied to the 'total turnover'. I suppose I am confused over what they mean by 'total turnover'.
Where legitimate expense has been incured such as cost of rail or flight, hotel bills, and a client agrees to pay this, should these expenses be included in the 'total turnover' ?
eg. suppose the client pays £1000+VAT for work done. But there was also £200 incured expenses for overnight accomodation, travel etc. The client agrees to pay the £200 expenses to the service company. The service company then passes the £200 to the employee to re-imburse them for the incurred expenses.
Does Flat Rate VAT apply to just the original £1000, or to the £1200 value?
bill