- Disbursement – Out of scope for VAT
- Where you have acted as an agent, the recovery would generally amount to a disbursement.
- A disbursement does not constitute a supply and is, therefore, not subject to VAT.
- Disbursement is a payment that your business makes on behalf of a client but which you later invoice the client for.
- Reimbursement – within in the scope of VAT
- Where you have acted as a principal, the recovery would generally amount to a reimbursement.
- A reimbursement is considered to be a part of consideration for the supply and follows the same VAT treatment as the main supply.
Source Spectrumaccounts
See also VAT Public Clarifications on recovery of expenses and financial options
