Overseas Travelling

This Overheads code records the cost of overseas travelling incurred in running the business. As an expense account, it normally carries a debit balance: debit entries increase the balance (recording new costs) and credit entries decrease it (for example, correcting an error or a refund received).

Real-world examples

International consultancy (flights)

A consultancy with overseas clients books international flights regularly. International passenger transport is zero-rated for UK VAT, so even an expensive flight carries no VAT to reclaim — a £450 fare is simply a debit of £450 to 7405 (Overseas Travelling) and a credit of £450 to 2100 (Creditors Control Account), with nothing posted to 2201 (Purchase Tax Control Account).

Occasional overseas trade show

The same business also picks up hotel and taxi costs while at an overseas trade show. Unlike the flight, these are charged with foreign VAT rather than UK VAT, so again there's nothing to post to 2201 on the UK VAT return — foreign VAT can only be recovered, if at all, through a separate overseas VAT refund claim, which most small and mid-sized businesses don't bother pursuing for modest amounts. Either way, the whole invoice is simply a debit to 7405.

Commonly confused with

Because code 7404 (Overseas Entertainment) sits right next to this one in Overheads, it's a common mis-posting target. Code 7405 is specifically for overseas travelling, while 7404 covers overseas entertainment — similar in nature, but keeping them separate is what makes the overheads section of your management accounts meaningful rather than a single lumped total.

What a mis-posting here costs you

An error posting to Overseas Travelling won't change total overhead spend, but it will distort the overheads breakdown that's usually reviewed line by line each month to spot cost creep.

Other codes in Overheads