To think that bartering/trading goods and services is quite simply tax avoidance?

[ShellyBoobs]

Someone on another thread was extolling the virtues of a friend who exchanges bookkeeping skills for goods. I've also seen advertising for companies who put people in touch with eachother for exactly this sort of trading to take place.

Is this not just tax avoidance in the same way as cash-in-hand tradespeople operate?

Am I missing something?

I've been told it's perfectly legal. But can't remember by whom.

Oh I don't doubt that it's legal - tax avoidance is also legal.

Would you have a problem with it though? I wouldnt.

Tax avoidance and tax evasion are two different things. The latter is a crime but as far as I am aware the former isnt.

Not declaring cash income is evasion, not avoidance.

Barter transactions should still go through the books. This page explains about how to do it for VAT.
www.hmrc.gov.uk/vat/managing/special-situations/samples.htm#4

Not reporting income is evasion (not avoidance).

Sorry, Imperial, my OP wasn't well worded.

When I mentioned cash-in-hand tradespeople, I was thinking of the situation where someone knows a joiner and he offers to hang a door for £20 one Sunday morning. Not the blatant 'pay cash and don't get a receipt' for £hundreds worth of business.

That's interesting, Bilbobaggins, I didn't think there would be a system for taxing barter transactions.

I should probably have looked into this a bit more.

In our world, it's called 'doing someone a favour' - let me think, if friend A comes and plumbs my house, and DH goes and wires his house and no money exchanges hands, how is that a form of tax avoidance? It's called friendship.

As Ophelia said. One person (A) has the skills to do something another person (B) needs doing, so A does person B a favour. Then B returns the favour later.

Yes, that's a barter system, mimij.

That's what we're discussing.

Next door have a super house because of it - all in trades - one weekend you'll find 6 bare chested fit 20yos fenciung and laying turf, then it all goes quiet as the bloke next door is off returning 5 favours - roll on 6 weeks and they are all back doing a patio or decking.

I like it when it's his turn for renovations

www.barterbuddies.co.uk/barter_uk/

Quite common practice in some areas.

Next you'll be saying if Mrs X is neighbourly and gives a dozen eggs, when her neighbour is cooking and sends in a pot of jam, it should all go down on an income tax form

What a strange way of looking at it.

I think there should be more bartering of goods and services, especially at a time when everyone is skint and prices of everything keep going up and up.

You can't barter with HMRC or the landlord, at least you can with friends and neighbours.

But I wouldn't really call it tax avoidance/evasion though...?

I do exchange services for services with some of my customers; I provide petcare, and they provide hairdressing, website design and support, bookkeeping, and private tuition for dds. I'm way under the VAT threshold, and when I added it all up it still didn't bring me over the tax threshold either, so HMRC aren't losing anything from me. My customer's accounts of course are none of my business, but since we're all skint, I doubt anyone's making millions out of this...

Next you'll be saying if Mrs X is neighbourly and gives a dozen eggs, when her neighbour is cooking and sends in a pot of jam, it should all go down on an income tax form

Yes, perhaps extreme but where should the line be drawn?

When I go to work, I exchange my skills for a wage from my employer. I'm taxed on that exchange.

When I worked in Finland for a year, part of my package was a 'free' house. I paid tax on that benefit. Wasn't I just exchanging part of my work for the use of a house that the company happened to own?

If I keep a front foor key for a neighbour and have large packages put into her secure porch and she gives me a Sunday roast once a month, I have to report it to HMRC. What rubbish!

I'm thinking more of the income tax side of things, Imperial.

Front door - not front foor. Sorry.

Actually I really hope this notion of bartering as tax avoidance doesn't take off.

All countries have informal economies, of varying sizes, and government generally tries to crack down on them because they're not taxable.

I would not put it past the Tories to start calling bartering 'tax avoidance' so they can continue to make life harder for people trying to cope and at the same time muddying the waters of all the big corporations engaged in the kind of tax avoidance that actually does hurt the economy.

So am I.

Look at it another way:

A normally earns a wage for plumbing and pays £100 per week in tax.

B normally earns a wage for joinery and pays £100 per week in tax.

A spends a week plumbing in a heating system for B in exchange for B spending a week fitting a new kitchen for A.

HMRC loses £200 in income tax.

What's the difference with them both just doing a week's work and not declaring the income?

I cannot believe I am even reading this thread!!!

Why on earth would someone care fo someone was not declaring monetary tax on doing favours for favours??

christ on a bike

Isn't there a system operating in some areas called 'lets'? And I know in Bristol there's a local 'pound', which is a formalised bartering system. Am wandering off now to investigate...

It's an ancient thing and how communities used to operate. Used to happen way before tax man was invented!

Trading goods shows great community spirit and care. Why should everything hinge on money?

OP, you are correct that a line must be drawn somewhere.

And where the line is drawn is where money changes hands.

Any attempt to draw the line elsewhere is insanely complicated and would cost more to administer and enforce than gained in revenue.