ChatterBank0 min ago
Tax on bartering
If I trade some computer expertise with my Account in return for a tax return no money changes hand & technically the government at least loses VAT income. Is this legal? Is it a valid loophole?
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No.There's nothing new here.The problem arises when people are not thinking about tax evasion. For example , bartering is a long tradition in farming communities, where people e.g allow grazing in exchange for corn .Sometimes the values involved are high. And it causes problems not just with VAT but income tax,tax on agricultural business, inheritance tax reliefs and other areas.
Every barter is supposed to be supported by an invoice and receipt .The 'price' is to be recorded as the fair market value .So the VAT should be shown on that price.Otherwise, you can imagine just how big the avoidance would be if the barter was in very high value items (Lamborghinis, diamond necklaces,yachts, lawyer's fees ) or in substantial quantities of stuff (many tons of grain)
http://taxationweb.co.uk/businesstax/article.p hp?id=266
Every barter is supposed to be supported by an invoice and receipt .The 'price' is to be recorded as the fair market value .So the VAT should be shown on that price.Otherwise, you can imagine just how big the avoidance would be if the barter was in very high value items (Lamborghinis, diamond necklaces,yachts, lawyer's fees ) or in substantial quantities of stuff (many tons of grain)
http://taxationweb.co.uk/businesstax/article.p hp?id=266
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