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05 July 2011
A trader using the VAT flat-rate scheme purchased two computers for more than £2,000 in total. One computer was faulty and was returned
Having recently persuaded a client to join the flat-rate scheme for VAT he informed me that he was about to buy a computer for £900 plus VAT. I then had to advise him that the VAT would be irrecoverable as he would have needed to spend £2 000 inclusive of VAT to be able to recover input tax.
Having looked at the pros and cons my client then decided to buy two computers and enjoy the input tax recovery. It then transpired that one computer was broken and rather than obtain a replacement he decided to exercise his legal rights (or at least he claimed that he had the right to do so) and asked for a refund in respect of that computer.
After all he felt that he didn’t really need the second machine and was buying it...
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