I've had a client ask me about using the Corgi Vat Saver, which basically splits jobs down into component prices and charges VAT amounts accordingly. ie energy efficient items at 5% and the rest at 20%. They charge a fee of 25% of the VAT saved for using the software. I rang HMRC regarding this, as I didn't think this was allowed and they assured me that they do not support the scheme. However, I've just had a call from the Corgi Vat Saver manager, telling me that they have never had a customer who has had to repay any VAT and that they have a department that deal with any disputes with the VAT man. Apparently they have been running for 8 years and have over 3000 customers.
I have informed my client that HMRC do not support the system and therefore if he goes ahead and he has a VAT inspection he could be liable for a heafty VAT bill.
Just wondering if anyone has come across this and can offer some advice.