Readers’ forum: Do separate payments prevent a VAT registration problem?

One of my clients is a minor celebrity. Following her appearance on a reality TV programme she agreed a contract of £100 000 to promote a financial product on behalf of an investment company.

The investment company is apparently partially exempt for VAT purposes and has asked my client to raise monthly sales invoices of £25 000 rather than a single invoice for £100 000 because this will apparently avoid the need for my client to register for VAT and charge VAT on the fee. Is that correct?

A colleague thinks that the total contract value is the relevant issue and not how it is paid. My client’s only other source of self-employed income as a sole trader is a retainer fee of £500 per month for writing an online blog about clothes.

What do readers think?

Query 20 309  – Fashion Freda.

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