Flat Rate Scheme Help!

sarahuk3

Good Afternoon,

I have recently taken on a client and am doing will be carrying out some bookkeeping work for him.

He is on the flat rate scheme, and has queried whether he can reclaim the VAT on two invoices (both totaling over £2000)

The first is 'software development' price £1485.00
Included in this invoice is annual hosting, price £275.00
VAT £352.00
Total £2112.00

My initial though is no, he cannot reclaim this as software isn't necessarily a capital asset? and as annual hosting would be revenue expenditure, it doesn't total more than £2000 inc vat.

The second invoice computer equipment £1817.00
VAT £363.40
Total £2180.40

If anyone could confirm that i am right in thinking he cannot claim the first invoice but can the second??

Thanks in advance.

Sarah

jamesm96

sarahuk3 wrote: »

Good Afternoon,

I have recently taken on a client and am doing will be carrying out some bookkeeping work for him.

He is on the flat rate scheme, and has queried whether he can reclaim the VAT on two invoices (both totaling over £2000)

The first is 'software development' price £1485.00
Included in this invoice is annual hosting, price £275.00
VAT £352.00
Total £2112.00

My initial though is no, he cannot reclaim this as software isn't necessarily a capital asset? and as annual hosting would be revenue expenditure, it doesn't total more than £2000 inc vat.

The second invoice computer equipment £1817.00
VAT £363.40
Total £2180.40

If anyone could confirm that i am right in thinking he cannot claim the first invoice but can the second??

Thanks in advance.

Sarah

Hi Sarah,

You're just about okay on the second one; there's a minimum limit of £2k inc. VAT which must be met before you can reclaim. The first one, though, is interesting; I'd like to think you can argue for the development (not the hosting though), but to be safe I'd call the VAT helpline and they'll give you chapter and verse.

Hope that helps.

MikeJ.

sarahuk3

Then this would mean that the software would fall below the £2000 limit, therefore cannot claim anyway.

Thanks for the reply, may call the VAT helpline tomorrow just to check.

Sarah

jamesm96

sarahuk3 wrote: »

Then this would mean that the software would fall below the £2000 limit, therefore cannot claim anyway.

Thanks for the reply, may call the VAT helpline tomorrow just to check.

Sarah

I hadn't even done the maths... you're quite right.