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VAT and non-staff members’ expenses

Shared from Tax Insider: VAT and non-staff members’ expenses
By Andrew Needham, July 2022

Andrew Needham looks at recovering input tax on expenses incurred by non-staff members. 

Many businesses use self-employed workers in their businesses to do specific projects or on contracts – what happens to the VAT when they incur expenses and claim them back from your business? 

Staff expenses 

When a business’s staff incur expenses that the business pays for, it is entitled to recover the input tax on those costs even if the staff have paid for them and the supply was made to them. For example, overnight hotel expenses, travel costs and subsistence. 

Who counts as an employee?  

In most cases, someone will only count as an employee if they are on the payroll, or are a director, partner or, in the case of a sole trader, they own the business. Therefore, pensioners, former staff, and job

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