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Does the name on the invoice matter?

Friday December 2019

Q. I am the finance director of a large company and have just learned that hotel bills we pay for in relation to our sales staff working away from home are always made out to the individual employee and not the company. Does this create an input tax problem?

A. The two challenges with input tax are to ensure that an expense is always for the purpose of your business (and more specifically that it relates to taxable rather than exempt activities) and secondly that the goods or services you have bought have been supplied to your business rather than any other party. It could be argued that the hotel has supplied accommodation and food to the employee and not your business but the good news is that HMRC accepts an input tax claim in this situation.

Tip. The above concession also applies to certain other costs where purchase invoices might be addressed to your employee rather than your business, e.g. motor fuel, repair costs, mobile phone bills, small tools and materials.

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