Recharges or Disbursements Charged onto Customers

There is a distinct difference and more importantly an implication for VAT purposes between recharges and disbursements charged on to customers;


Disbursements are where payments are made to a supplier on behalf of a customer and subsequently these costs are passed on to the customer when invoicing them. Disbursements should not include VAT when charged on to the customer, this is because effectively you’re just acting as their agent.

In order to treat a payment as a disbursement all of the following must apply;

  • you paid the supplier on your customer’s behalf and acted as the agent of your customer
  • your customer received, used or had the benefit of the goods or services you paid for on their behalf
  • it was your customer’s responsibility to pay for the goods or services, not yours
  • you had permission from your customer to make the payment
  • your customer knew that the goods or services were from another supplier, not from you
  • you show the costs separately on your invoice
  • you pass on the exact amount of each cost to your customer when you invoice them
  • the goods and services you paid for are in addition to the cost of your own services


Costs that your business incurs itself when supplying goods or services to customers are recharges and not disbursements for VAT. Recharges should be invoiced to customers including VAT on sales invoices.

Examples of costs that are recharges and not disbursements are;

  • an airline ticket that you buy to visit a client or to travel to a job, if you recharge the cost to your client you must charge VAT because the flight was for you, not for the client
  • postage costs you incur when you send letters to your customers, these are normal business costs and you must add VAT if you recharge them
  • a bank transfer fee paid when transferring money from your business account to a client’s account - even though the bank’s fee is exempt from VAT, if you recharge the fee you must charge VAT, because it was for a service provided to your business and not to your customer.

Please do not hesitate to contact us should you require any assistance with VAT matters.

The information in this article is believed to be factually correct at the time of writing and publication, but is not intended to constitute advice.  No liability is accepted for any loss howsoever arising as a result of the contents of this article. Specific advice should be sought before entering into, or refraining from entering into any transaction.