Hi, Lindas297. Since the subscription contract is in your name, QuickBooks cannot classify this expense as a disbursement. As the account holder, the VAT cost is categorized as a business expense rather than a payment made on behalf of your client.
Under UK VAT rules, an expense qualifies as a disbursement if:
- You paid for the subscription on behalf of your client while acting solely as their intermediary.
- The subscription was exclusively for their use, not yours.
- You billed the client for the exact cost of the subscription without applying any markup.
- You provided a receipt or invoice that clearly shows the expense was paid on their behalf.
Since you're a non-VAT registered consultant, you won't be able to charge VAT on your invoices. However, if VAT is included in the QuickBooks subscription fee, it is charged as an integral component of the service cost.
If the subscription account is in your name and you invoice the client for the subscription cost, they will not be able to reclaim VAT from HMRC, even if you provide them with a copy of your invoice. HMRC rules dictate that only the person named on the original invoice can claim the tax.
If you have any additional questions, don't hesitate to reach out. We're here to help!
