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• # 111850
• Sun 13 Dec 2015 01:40 PM

Hi

Has anyone heard of bartering?  Basically, workman (No 1) does some work for workman (No 2) for a total of two hours.   Rather than get paid they both keep a note of the hours of work provided by workman (No 1).  

Some time in the future workman (No 2) does some work for workman (No 1) for two hours and they call it quits with no money changing hands.  

Is this legal/money laundering?  I am told there is a village somewhere in the uk that does this quite a lot.  Any advice anyone?

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• # 111868
• Mon 14 Dec 2015 07:50 PM

Hi, I wouldn't quite call this bartering.

Yes it is quite common for people/companies that often do work for each other. They should however produce an invoice as normal for their work so that it shows in their accounts correctly.

When the invoice is 'paid' by receiving services in return a journal can be entered as a 'contra' between the sales invoice and purchase invoice which will cancel each other out if they are for the same amount. If it is not it will correctly show the balance that is owed. This can either be paid or remain there until the next work received.

Hope that helps

• Adrienne Blair-Underwood
  24-7 Accounts
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• # 111874
• Tue 15 Dec 2015 08:58 AM

Hi Ady

Thanks for your response.

How would you deal with it if one was VAT registered and the other was not?    Would there still be VAT to pay?

Sue

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• # 111876
• Tue 15 Dec 2015 03:59 PM

Newby - Sue said:

“

Hi Ady

 

Thanks for your response.

 

How would you deal with it if one was VAT registered and the other was not?    Would there still be VAT to pay?

 

Sue

”

 Yes the business that is VAT registered would need to show this on their invoice, so if there was an agreed price of £100, they could then just show a net cost or sale as £83.33 and account for the VAT appropriately.

• Valerie
  FICB PM.Dip

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