Thanks Lavender2306 and les35.
As Lavender2306 said, that is exactly how we work and I'm finding it really frustrating that my accountant doesn't agree with me! (That it should be a disbursement)
I have looked a the criteria again and I've also contacted the VAT helpline. They said they couldn't advise but pointed me here: https://www.gov.uk/government/publications/vat-notice-700-the-vat-guide/vat-notice-700-the-vat-guide#supplies-made-by-or-through-agents-other-situations to point 25.1. They also said to get a definitive answer I would need to write to them.
So that's what I've done. And I have addressed each criteria and asked a couple of questions:you acted as the agent of your client when you paid the third party:
Yesyour client actually received and used the goods or services provided by the third party (this condition usually prevents the agent’s own travelling and subsistence expenses, phone bills, postage, and other costs being treated as disbursements for VAT purposes):
Yes - The service is the delivery of the client’s invitations to their guests (This is not our cost of postage, this criteria seems to relates to us needing to send something to our client, not to send something on behalf of our client)your client was responsible for paying the third party (examples include estate duty and stamp duty payable by your client on a contract to be made by the client):
Yesyour client authorised you to make the payment on their behalf:
Yesyour client knew that the goods or services you paid for would be provided by a third party:
Yesyour outlay will be separately itemised when you invoice your client:
Yes – please see further question belowyou recover only the exact amount which you paid to the third party:
Yesthe goods or services, which you paid for, are clearly additional to the supplies which you make to your client on your own account:
Question 1 – Could you please clarify whether the postage costs of sending something out on behalf of a client is a disbursement?
Question 2 – This question relates to any disbursement (for example a photographer’s fees). With regards to the criteria “your outlay will be separately itemised when you invoice your client”, does this mean the supplier should invoice my company and I would invoice the client? If so, should I also contract with the supplier?
So, I hope they understand where I'm coming from and I get a reasonable response with a good explanation. Lavvender2306, thank you so much for understanding my situation. Finally someone does