Just wondering if someone would be able to help me please?
I have an invoice for the rental of some software that is being my 12 monthly installments.....how do I account for the VAT on the invoice? Is it the same as if i was buying something on finance and the initial deposit is the VAT portion?
Do I use the 1st two payments as the VAT payments to be able to claim it back or do i spread it over 12 months? I am thinking the 1st option but not 100% sure!
is the software yours to keep and use forever after twelve months or are these genuine rentals?
You need to look carefully at the agreement to determine the sort of agreement that it truly is (not always as obvious as it might sound!).
For a straight rental agreement where you are effectively hiring the software then the tax point is each rental.
Where you are purchasing the software (even where of no use after twelve months) then the tax point is the initial purchase (actually slightly more complex than that, see below), not the instalments which are more akin to HP than rental.
For example, with cloud software you rent it but for desktop solutions you are generally buying the right to use (not to actually own).
I notice that you have still not posted an introductory thread to tell the site a little about yourself including which professional body you are with (Joanne has asked a couple of times in earlier threads). Don't worry, it's not a witch hunt, we just ask as it helps people to be able to gear answers at the right level (i.e. we would not use the same language resonding to an FCCA as opposed to (say) an ICB student).
HTH,
Shaun.
The see below bit. The actual tax point where this is a purchase rather than a rental is the earliest of :
The date of supply The date of issue of the agreement The date of the issue of a VAT invoice
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Ahh thanks Shaun, I will have another read through the rental agreement. I was under the impression it was purely rental, if we stop paying after a year we can no longer use it but i will double check that!
