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Barter your way through COVID disruption

Source: Other | | 10/11/2020

While we wait for the magic-bullets that promise to reduce the impact of COVID – vaccines etc – should we be exploring ways to exchange goods and services with our suppliers and customers?
Barter is defined as: the exchange of goods and services without using money.

Perhaps a decorator could repaint the outside of a local restaurant in exchange for a prepaid voucher for a number of meals once the present restrictions are lifted.

Exchange in this way could help to sustain economic activity without the need to impact the cash-flow of either party.

Obviously, invoices would need to be exchanged and VAT regulations observed and in certain circumstances – if any VAT could not be recovered by one of the parties – then cash flow would be affected.

Likewise, the deemed cost of goods exchanged would need to be a tax allowable deduction to the other party’s business, otherwise tax liabilities may be increased.

Nevertheless, there may be mileage in this approach if the boxes are ticked:

  • No VAT issues, and
  • No tax issues.

As a bonus, barter would underline support between businesses and create lasting goodwill that will benefit all as we gradually emerge from the threat of coronavirus in the coming months.

 

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McAllisters is a partnership trading from Paxton House, 11 Woodside Crescent, Glasgow providing accountancy and tax services and general business advice and is a member of ICAS (Registration No 0342) and an FCA exempt professional firm (No 301235). Its VAT number is 261 3019 94

McAllisters (Scotland) Ltd is a related business providing tax and business advisory services to McAllisters and its clients. McAllisters (Scotland) Ltd is registered in Scotland (Registration number SC146856). Its VAT number is 624 0564 62.

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