Tax & Bartering – Swap Shops

After reading various parenting blogs I feel that I am well versed in how to get my children to behave.  Putting these methods into practice is however a different prospect.

Tax for Fruit

Jabo (#1 Son) and Baby Jarvis (#2 Son) are typical brothers.  They love each other emphatically but have no hesitation in giving each other a sound kicking.  Instilling the concept of sharing seems an impossible task, with toy figures regularly being the subject of a tug of war.  The little figures smile on deliriously whilst BJ holds their feet, with an iron grip, and J pulls him around the room crying “Mine”.

Happy Land characters are even oblivious to the biting and hair pulling which inevitably occurs when arguments over the iPad ensue.  To be fair J does go easy on me but is still successful in securing the tablet!  So what to do?

Parenting Gurus seem to think that the correct method is to

a)      Segregate the children from each other

b)      The parent should bend down to the Child’s eye level

c)       The parent should then calmly explain that sharing is a nice thing.

d)      The child should apologise

e)      The parent and child should hug

After trying this method on various occasions the only result was a five minute respite.  Then the Fisher Price sponsored WWE style squabbles commence again.

I have therefore developed the TTF method of refereeing such matters.  It follows this pattern:

a)      SHOUT REALLY BLOODY LOUD AT THE ONE WHO IS WINNING!

b)      Confiscate such smirking toy that is subject to the conflict.

c)       Separate the perpetrators

If it gets really bad I threaten them with watching the 2007 Gillingham v Orient match on VHS.  A really dire match in which Gillingham beat us 3-1 after not winning at home for 24 years*.   I got soaked because the away end didn’t have a roof, Posh Dan left at half time, the legend that is Jabo scored and I blew a gasket at J J Melligan.  If anyone is still awake and is considering ringing childline this is obviously an idle threat.  No one would be that cruel!

I’m sure these child behaviour experts have years of medical and psychological experience but my way seems a lot more effective.   I also resort to trading food for good behaviour.  J loves his fruit and it’s amazing how much silence an apple will buy you.

So shouting really loud and bartering are my main tips when dealing with children.  In the business world bartering seems to be making a resurgence.  Businesses should however be aware that the tax man will want a slice of the action.

*ok I made this up, but they hadn’t won for a bloody long time.

 THE TAX BIT

HMRC consider bartering between businesses as a taxable event.  Both the bartender and the accountant who swap a cocktail for tax advice will be subject to income tax, national insurance and VAT (if applicable) on the transaction.

HMRC advise that the business should record the retail value of the transaction at the point of barter.  So the bartender should include the cost of the cocktail in his tax return whilst the tax advisor should do the same in terms of the fair value of his services (if he can see straight that is!).

HMRC will expect to see the sales and purchase orders in respect of any taxable supplies in the event of a HMRC enquiry.

A couple of things to be careful of:

  1. When dealing with other businesses on this basis ensure the transactions are recorded correctly and that all elements of the trade are recognised.  Something of low value to you could actually have a far higher market value.
  2. If both transactions are standard rated no VAT will be payable as the input and output tax should netted off against each other.  But if one service is zero rated this will not be the case.
  3. Take into account the value of the goods supplied in the bartering process to check whether you have exceeded the VAT threshold.
  4. Make sure you have sufficient cash at the end of the year to pay your tax bill.  Bartering too much and you will have a major cash flow issue in January.

Bartering can be a good way of trading between businesses but it is important to keep good records so that you can prove to HMRC that your affairs are correct.

I’m off to see if I can swap my Orient season ticket for something of equal value….maybe a packet of lockets after all that shouting!

By Peter Cross

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