I would be grateful if someone could clarify the position on the following.
Client with a turnover of £100k pa on the flat rate scheme. Software designer, buying minimal goods and could potentially get caught by the new limited cost trader rate, however, he does buy software (which could be bought as a physical disc, not downloaded) annually at a cost of say £3000.
He only does this once a year, but the supplier allows him to pay for it over 12 months.
He prepares his VAT returns using cash accounting. I accept the VAT tax point would be the invoice date therefore using invoice accounting for VAT he would be caught by the higher rate in 3 quarters, but be ok in the quarter where he received the software invoice. However, when preparing his VAT returns on cash accounting, he would exceed the 2% goods rule every quarter. Would he therefore be able to stay on his normal rate every quarter?
I know they could go onto annual VAT accounting to make this a non-issue, but I would like to know the situation for other clients in similar positions.
Thanks for any of your views!
