Well, I can only speak from my own experience of auditors and financial directors I have worked with, as a solution to that very problem of making sure both client and freelancer have the proper paper trails. If auditors are saying different things then that makes it a whole lot trickier! Clearly the best bet is to speak to your own Company Secretary and make sure you're doing what's right for your own circumstances.
The point I was making is, freelancers may well prefer to get their own materials because it's quicker and easier for them ; that both sides will need a paper trail of some sort; and that costs / process of all this should be agreed between client and freelance in advance of any spending.
Sally
Sally Fort
Consultant: cultural projectswww.sallyfort.com
From: Crispian Emberson <[log in to unmask]>
To: Sally Fort <[log in to unmask]>; [log in to unmask]
Sent: Sun, 13 March, 2011 0:09:35
Subject: Re: Using story tellers and musicians
Re: Using story tellers and musicians
Hi everyone!
Totally right Richard! The issue is who is claiming the deduction as cost on their accounts and claiming the VAT element if there is any. Remember each receipt can only be claimed once. The real problem occurs when the client decides to try and claim VAT back on the receipts you are already claiming VAT on. As a standard of good accounting procedure – you don’t copy receipts and hand them out to clients. If they want to see them that's ok but you don’t copy them. You supply them with an itemised invoice.
Generally auditors do not like photocopies of anything, ever!
That’s from the wife – an auditor!
Cheers
Cris
Crispian Emberson
Managing Director
Heritage Destination Consulting Ltd
Poppy House
Mundesley Road
Paston
Norfolk
NR28 9AD
United Kingdom
Tel: (+44) 0871 218 0817
Mob: (+44) 07831 776361
Email: [log in to unmask]
Web: www.heritagedestination.com
Skype: crispianemberson
On 12/03/2011 23:30, "Sally Fort" <[log in to unmask]> wrote:
Hi Richard and all
Just to clarify a couple of things:
1, yes very good point freelancers will need to hang on to their receipts but it's very commonplace to be asked for them on the basis of the arrangements laid out below - however photocopies will be accepted (I have worked - full time and freelance - for several companies who have worked on this basis regularly, and the auditors are perfectly happy with copies)
2. Maybe it's just different cultures? It's definitely very common in performing and visual arts, and education, to work this way when providing materials - obviously not so much in science communication.
3. Yes you could indeed just agree it as part of the fee and avoid all of the above complication
Every scenario is different, there is rarely a 'one size fits all' approach (sadly, imagine how much quicker we'd all get things done)
Sally
Sally Fort
Consultant: cultural projects
www.sallyfort.com
<http://www.sallyfort.com/>
From: Richard Ellam <[log in to unmask]>
To: Sally Fort <[log in to unmask]>
Cc: [log in to unmask]
Sent: Sat, 12 March, 2011 23:10:46
Subject: Re: Using story tellers and musicians
On 7 Mar 2011, at 09:35, Sally Fort wrote:
If they are likely to need to buy materials to deliver the sessions you would need to cater for that in addition, you needn't include it in the fee but you could say something like "a separate materials budget will also be available" and then negotiate it with your chosen person / people; the easiest and quickest way is that they buy what they need then claim it back on their invoice with receipts (as long as they've agreed them in advance with you).
Sorry, this advice is simply wrong.
If a contractor needs to buy materials in order to fulfil the terms of a contract with you, then the contractor, not you, needs to hang on to the receipts for the expenditure as evidence that this money has been paid out on legitimate business expenses which can be offset against their gross income for tax purposes. They DO NOT and SHOULD NOT have to submit recipts to you as the client as this will compromise their tax position. All you are entitled to from them is an invoice which may or may not separately itemise the items bought in order to complete the contract. As long as the agreed materials budget is not exceeded and the contract is satisfactorily completed you have no cause for complaint nor requirement for additional information.
If you expect a contractor to buy materials on your behalf, then expect to pay a small additional price for them, as the contractor has effectively lent you the money to pay for the goods, as they'll have had to pay for the goods at point of sale, and the contractor has had to expend time and (sometimes considerable) skill in identifying and purchasing the goods on your behalf.
If you anticipate the materials budget being a significant part of the contract price consider advancing at least this part of the contract price to the contractor - a canny one will probably make the receipt of an advance payment in these circumstances a term of their contract. A really canny one will insist that the advance payment is made in the form of a non refundable deposit, so that if the contract goes sour (and some do) they are not out of pocket on the materials.
In nearly twenty years of freelancing I've NEVER been asked to submit recipts to substantiate the materials part of an invoice, and anyone asking me to do this would get an extremely dusty answer!
Hope this helps
Cheers
Richard Ellam
L M Interactive
Science Shows and Hands-On Stuff
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