Only if your limited company eventually invoices the CIC for those expenses.

Otherwise, no, as it's not for the purpose of your company's trade.

Pennywise
To clarify, if it is a speculative visit that generated the hotel expense - and I paid for it and claimed VAT back through my limited company... that is me chasing work with no client guaranteed.

I am chasing the work as both the consultant [ie through my own limited company] and the Director of the CIC - they are the same thing, I win the work for the CIC, I can then invoice the CIC for my time via my limited company.

As both the CIC and the limited company are VAT registered, and the work I am doing is for me as a consultant and as a Director of the CIC... does this matter which claims it?

[QUOTE=00ec25;74143331]confusing, do you mean:
[Expenses paid in this way being non taxable and not able to reclaim VAT?}

For example - local authority pays the full amount of the receipted expense [whether VAT or not] - they just ask for proof of expense - which I photo and send. I then have a pile of receipts - I can't claim the VAT back on any of these as I was reimbursed the whole amount. With mileage expenses, it is more confusing - the local authority will pay me .45p per mile - I put in fuel and pay VAT - can I reclaim this VAT?

[ your work as director of the CIC incurs expenses which you claim off the CIC as a director of it?]
I cannot claim expenses from the CIC. There is no money spare to cover these costs. Any speculative expenses I incur, or equipment etc - are purely mine as a consultant under my own limited company - if and when I get a contract - some may be vat claimable?

I think a major factor in your confusion is you are unclear of who wears whose hat in this activity and therefore what the relationship is one to the other. Understand that relationship and the VAT will answer itself

There are 5 players:

1. The Client - the LA is the client. It has a project it wants done and it will pay for that work, the payment comprising 2 elements: a fee and reimbursement of expenses incurred over and above the fee.

2. The Supplier - the CIC is the supplier. The LA tasks the CIC with the project work and leaves the CIC to resource the work as the CIC sees fit. The costs of resourcing the work are costs incurred by the CIC. It will fund those costs from 2 elements: a) the fee paid by the LA and b) reimbursement of expenses incurred by the CIC over and above the fee and *recharged* to the LA.

3. The CIC worker. You as a human being are an employee of the CIC. The CIC may decide to do all (or some) of the project using its own staff, ie you the human being. You are its worker and any work you do whilst wearing your employee hat is a cost for the CIC and comprises 2 elements: a) whatever "pay" you get as an employee and b) any expenses you incur which you claim from your employer, the CIC

4. The Ltd Co- rather than use its own employee workers, the CIC can of course choose to outsource the project work to an external "consultant". That would be (your) Ltd Co. and the Ltd co will therefore have a price it will charge the CIC. That price comprises 2 elements: a) the fee to be paid by the CIC and b) reimbursement of expenses incurred by the Ltd Co and *recharged* to the CIC over and above the fee .

5. The Ltd Co employee/"consultant" - "you" the human being are an employee of the Ltd Co and it is "you" who the Ltd co needs to do the work it has been contracted to provide to its client, the CIC. As an employee of the Ltd Co, you a) expect to be paid by (your) company for your time and b) not be out of pocket if you incur expenses in performing that work, ie you will claim expenses from (your) Ltd Co.

Lets look at the 2 obvious permutations

Scenario A) the work is done by the CIC employee.

Expenses are claimed by the employee from the CIC. Those are costs incurred by the CIC, so the CIC can claim VAT included (where applic) in those costs as its own "input" VAT. Now the bit people nearly always struggle with: the CIC *recharges* the expense cost it has incurred to its client. The recharge MUST have VAT added to it as that is the rule people don't appreciate. The client therefore gets a bill for a gross cost which it pays to the CIC. You won't understand this unless we look at numbers, let's say the expense is a £50 hotel room:

• the employee pays the hotel £50. That cost is gross, so is made up of £41.66 net and £8.33 of VAT
• the employee claims £50 from his employer, the CIC
• the CIC reclaims £8.33 of ("input") VAT and records £41.66 as a net expense cost incurred by its employee doing work for his employer
• the CIC *recharges* its client for the net cost it incurred (£41.66) and must add ("output") VAT to that bill, ie it charges the LA £50. The £8.33 VAT it has added must be paid to HMRC by the CIC as output VAT
• the LA gets a bill for £50. The LA pays that bill in full, but claims £8.33 as input VAT, so the net cost to the LA is £41.66. The LA sends the £50 to the CIC and thereby the CIC has the £50 of cash it needs with which to i) fund the £8.33 VAT payment to HMRC and ii) fund the £50 cash reimbursed to its employee comprised of the remaining 41.66 of cash from the LA + the 8.33 of input VAT it claims back from HMRC.

Now look at scenario B, the work is done by the Ltd Co.

The mechanics are the same: you the human being (wearing your employee/"consultant" of ltd Co hat) do the work, claim the expense from the ltd Co, who recharges its client the CIC, who recharges its client the LA. The funds flow from the LA back to the Ltd Co which therefore ends up with zero cost having reimbursed its human being employee £50 and been paid £50 by its client, the CIC. The CIC has simply acted as a conduit for the £50 going through and also has no gain and no loss.

please note if that statement means the invoice sent to the LA has not charged VAT on the value of the expense being claimed then the claimant entity is making a very bad VAT error and could be pulled up sharply by HMRC if VAT inspected

read this, noting that *Disbursements* and *Recharges* are two totally different fish. "Your" expenses are *Recharges*
https://www.gov.uk/guidance/vat-costs-or-disbursements-passed-to-customers

as explained above, "I" need to be clear who "I" am, and then "I" will understand if "I" can claim the VAT back

again, define "I", for "I" am not a VAT registered entity, "I" am a human being.

the entity receiving the human being's expense claim of 45p can, if that entity is willing to do the (extra) admin, claim input VAT on mileage using the relevant "Advisory Fuel Rate" based on fuel type and engine size of the vehicle concerned.
https://www.gov.uk/government/publications/advisory-fuel-rates
For example 2,000cc petrol = 22p. That gives 22p /120 x 100 x 20% = 3.66 ppm VAT (or in simple maths 22/6=3.66)

so the human being drives 100 miles, claims £45 mileage expense and the entity recovers 100 x 3.66 = £3.66 of VAT leaving it with a net cost of 41.34 which it then *recharges* to its client as already explained above.

if the entity chooses not to reclaim the VAT using the advisory rate, then the entity must *recharge* its client at 45ppm + 20% VAT

again you need to be careful who is doing the work

if you as CIC employee do the work your Ltd Co cannot claim any costs (or VAT) at all since those costs do not belong to the Ltd co.

if you the Ltd Co employee do the work then, as already explained by pennywise, the Ltd Co cannot claim the costs as it is not work done for the purposes of the Ltd Co's own trading unless the ltd Co is going to invoice for those costs and thus convert the work done for the CIC into work done by the Ltd Co for its CIC client