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bigduckontax
bigduckontax, Accountant
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I have a question about tax in bartering that I'd really

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Hi, I have a question about tax in bartering that I'd really appreciate some answers on. I have an idea that essentially allows the general public to offer a product in small volumes to small food retail businesses as and when they can fulfill/the retail business requires. Cash is not the currency, but an equivalent is. The member of the public can redeem the credits at any of the food retail businesses signed up to the scheme. Can you let me know if there are taxable issues here for either the consumer or retail business - is their a recognised ceiling of deals in bartering before the tax man gets involved. I can't imagine it would be more than £500 spread across the year for some of the most productive consumers. The average would be around £50 - £150 in terms of credit values.
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. Bartering is no different to any other form of business and is liable to Income Tax (IT) in the usual way. There is no 'ceiling' in bartering deals. TaxationWeb has the following advice: 'Market value and production of the sales invoice Clearly the service or product provided must be at market value (Sharkey v Wernher) and a ‘contemporaneous’ sales invoice must be made with sequential sales/fee invoice number and date. The business records must show how the invoice was settled, perhaps via a drawings journal or by the settlement of a purchase ledger invoice. Advice regarding the recording of such revenue is given in the Inland Revenue Booklet ‘Self Assessment – A General Guide to Keeping Records’. To quote direct from the booklet: 'Even if you do not record these through a till, you will need to make a record at the time the transaction takes place of the goods taken or supplied and their retail selling price.'' So you will be running a retail business and if your turnover reaches or approaches 83K in any one year then VAT will raise its ugly head too. You should read the full article which you can find here: http://www.taxationweb.co.uk/tax-articles/business-tax/the-barter-system-%E2%80%93-the-hidden-evasion.html I do hope that my reply has been of some assistance.
Customer: replied 1 year ago.
Thank you, I'd already read the TaxationWeb piece - I'm afraid your answer is too vague for my question. Maybe I need to be a little more specific about what info I am looking for please. The scenario: I am a member of the public who grows his own veg and I use a service that allows me to see that my local pub is looking for 20 courgettes. I have these in abundance and the going rate is 10 barter credits for these. I can then use my credits to have a meal in any restaurants/pubs etc when I want to. What are the tax liabilities for the consumer as well as the pub working at such low levels of trade, how should all this be recorded and who's responsibility is it to keep the tax man informed of trades. From what I understand of LETS (http://www.letsf.org.uk/) the tax man is not interested in this level of deal - hence my question.
Expert:  bigduckontax replied 1 year ago.
It is both yours and the trader's responsibility to keep a paper trail of the bartering transaction. In the situation you have described you have made a sale to the pub of 20 courgettes. Let us for simplicity say that the barter credits got you a meal in the pub then your sale for tax purposes would be the cost of the meal and the pub's purchase, the bartered meal, ditto. If you run your business in this manner then HMRC will be very interested and down on you like a ton of bricks, particularly if your trading profits exceed your Personal Allowance, currently 11K.
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Customer: replied 1 year ago.
Thank you that is very helpful. So as long as I produce a paper trail and keep record of it, the consumer and the retailer have a duty to keep hold of their records themselves.
Expert:  bigduckontax replied 1 year ago.
Correct: thank you for your support.

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