If you are reimbursed expenses from your client, the receipt is VAT applicable unless the expense meets the following rules from HMRC;

‘Before you treat a payment as a disbursement(no VAT applied), you’ll need to make sure all of the following apply:

• you paid the supplier on your customer’s behalf and acted as the agent of your customer
• your customer received, used or had the benefit of the goods or services you paid for on their behalf
• it was your customer’s responsibility to pay for the goods or services, not yours
• you had permission from your customer to make the payment
• your customer knew that the goods or services were from another supplier, not from you
• you show the costs separately on your invoice
• you pass on the exact amount of each cost to your customer when you invoice them
• the goods and services you paid for are additional to whatever you’re billing your customer for doing yourself

An example of this would be the purchase of a computer system on behalf of a client following a consultation in IT requirements.

It’s usually only an advantage to treat a payment as a disbursement for VAT purposes if the supplier didn’t charge VAT on it, or if your customer can’t reclaim the VAT.’

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