Falling flat

I have a client who applied to HMRC to join the flat-rate scheme on
1 October 2010.

It was a bit embarrassing for our practice as we should have encouraged him to join years ago because he will enjoy a big VAT saving by using the scheme.

The dilemma is that our client has received a letter from HMRC acknowledging his application to use the scheme but confirming his start date as 1 October 2009 i.e. a year earlier.

In reality this is probably a ‘careless’ error in writing the date by the HMRC officer sending out the letter but my client’s view is that we should follow the instruction given on the letter and include £7 000 as an adjustment on his next VAT return i.e. the tax saving he would have enjoyed had he joined the scheme a year earlier on 1...