Definition

Disbursements are payments made by a business on behalf of a client or another party, typically recoverable without VAT when properly documented.

Key points

• Must be made in the client’s name and for the client’s direct benefit.
• Should not be included in taxable turnover if acting as an agent.
• Require clear supporting invoices and receipts.

Practical example

A consultancy firm pays a government license fee on behalf of its client and later re-invoices the exact amount without charging VAT.

Why it matters

Proper treatment of disbursements avoids over-reporting VAT and ensures accurate expense management.