Friday afternoon - what if type question

Fulham_Mark

Let's say I design a friend a small website. My friend doesn't have much money so in return does some tasks on my garden; perhaps installs a garden pond.

Presumably there is no tax to pay on my new garden pond as this was just a favour and no money changed hands.

This arrangement gets talked about and I agree to make my accountant a website in return for doing my tax return. Kevin wants a website but can't really offer me anything in return. But his mate, Timmy, can give me a lift to the airport if Kevin cuts Timmy's hair. So this three-way deal is make.

This is really going somewhere. We're all providing each other services without the hassle of invoices, payments, VAT, income tax.

So I create an web-based exchange where people offer tasks (with a notional cost of 1p) but which can be traded between us all so that we can buy services by offering our own.

So I can offer websites and no money is exchanged but I keep getting my hair cut, plumbing done and car services.

If this is legitimate then we are on our way to a cashless, tax-free society.

The problems are things like food and power, I still need money to buy these. Unless we move to organic small-holdings in the countryside and grow our own. Pop-up a wind turbine and bob's your uncle - as well as baby-sitting provider.

any thoughts??? Can we build the moneysavingexpert utopia?

fengirl_2

Its already been done:
http://www.letslinkuk.net/

Murdina

I think you will find that if you are carrying on a trade or business being paid "in kind" is still taxable and VATable. And if you start doing any of what you suggest to a significant degree then you are likely to be regarded as trading.

For VAT see here:

http://www.hmrc.gov.uk/vat/managing/special-situations/samples.htm

For income tax, it is just a basic principle - just because you sell or render a service for something other than money, does not mean that there is no consideration in contract law and nothing to bring to account. Of course how you price and value all this is another matter.

Fulham_Mark

Thanks!!
Very interesting, although sadly this idea is clearly a no-go

Mark