VAT ON PREPAID SERVICE
I just have a question regarding VAT.
My client has just been registered for Vat and the 1st return is end of Jan 2012. They operate a private hire business (minicab service). They are agents and only have to pay VAT on the commissions they earn.
They take lots of advance bookings which are paid at the time boking with credit or debit card.
I am stuck on an issue. I was told that we have to pay the VAT on the day the credit card is charged, even if the journey is carried outside the 3 months period the VAT return covers.
These all assume that we know commission we will earn if the job is carried out as it is booked. This is not always the case. The job might get cancelled or there is additional drops etc.
Questions: Can we pay the Vat only once service is carried out (for the journeys paid prepaid).
Thanks for your help in advance. Happy New Year to everyone.