I am soon launching a new software product which is delivered as 'Software as a Service' (SaaS). This means it's an application which runs over the internet and is accessed via a user's browser (phone or laptop). There is nothing for the user to install. The subscription is a small monthly fee (less than £5 per user).
Obviously as it's not live yet we are not near the £85k VAT threshold, but I'm trying to plan ahead by seeing if it's best to register for the Flate Rate Scheme when we do get to £85k p.a. What I'd like to understand is what category this type of business would come under? (and therefore what %VAT rate I'd pay).
Further info: The software is based on a server in the UK- though we can move this to anywhere in the world. Initially it is only for UK customers, but we will soon expand that to US, Canada, Australia etc. So really we could incorporate in another country if that enabled us to avoid having to levy VAT in the first place.
Many thanks for your input.