UK Barter transactions between limited company director and another business

[Cr0ft]

Hi,

I run a 2 man limited company. A family relative is about to start property developing and wants to employ me to do turn about 2 houses a year round for him.

He is proposing buying items such as holidays etc for me to the value of m services provided.

He believes this will avoid any tax implications. My company is VAT registered and to start off he would be setting up as a sole trader.


My understanding is VAT and income tax would still need to be accounted for both ways. He seems to think that there are no tax implications.

I really don't want to go to prison for tax evasion hence my post! All advice from qualified accountants appreciated!

Thanks.

 

[Accountants4business]

Hi Cr0ft

This is as good as receiving cash in hand which HMRC doesn't want to see (unless it is declared of course). You are providing a business service which in turn commands a certain price. Once these terms have been agreed, the funds need to be made payable to your Ltd company or to you as a sole trader, and the relevant tax deducted to ensure that you are compliant.

I would not accept the holidays and gifts as this is effectively tax fraud!

Regards

David