Make sure you claim back the expenses that you charge your customer
Author: Russell SmithMay 21, 2013
A very easy way of paying slightly more tax than you need to is if you run a business that charges your customers expenses.
These expenses could be anything from travel, stationery, hotel bills etc. You agree with your customer that you will re-charge these and you remember to invoice them. So far, so good.
However, you then have to remember to include these recharges in your overall expenses in your accounts. If you include them on the sales and include them in the expenses. The overall tax effect is zero.
But if you include them in the sales and not on the expenses, the recharges will just count as normal sales, this will artifically increase your profit and you will therefore pay too tax on this.
So if you do recharge your customers, make sure that you include the recharges in your expenses to avoid paying the extra tax.