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.
Debbie
the First Tier Tribunal have recently heard a case using just this sort of system. You can read the decision here: www.bailii.org/uk/cases/UKFTT/TC/2013/TC02895.html
Essentially, the Tribunal held that it was artificial for a plumber to split his supply in this way.
I suggest that any plumber continuing to use this system is leaving himself vulnerable to HMRC action.
You can PM me to discuss if that would be helpful.
Many thanks, you have confirmed what I thought. They tried to tell me that it is not illegal, and although it is not, the VAT liability and responsibility lies with the company and not with Corgi Vat Saver. I don't think my client will go ahead as he is very sensible, but I think a few of his friends may have to rethink their involvement.
