Accounting for Trade by Barter

[Tbozz]

A good friend is a self employed virtual assistant, she rents an office in an office block.
She does the reception job for the owner of the office block in exchange for office space, hence she do not pay rent on her office space.

Please how do she account the rent as expense on her accounts and self assessment, as there is no records of rent payment going out of her bank account.

 

[StevensOnln1]

If she pays no rent then surely she has rent expenses of £0.

 

[Clinton]

HMRC disagree.

All receipts arising from contra, barter or reciprocal arr angements must be valued at the money’s worth of the goods and services exchanged. The corresponding expenses should also be brought into account. If both businesses involved in the transac tion are registered for VAT, both should account for VAT on each separate supply made to each other, even if no money changes hands, or only a net amount is paid after setting off one outsta nding balance against the other.

I'm just the messenger.

 

[Tbozz]

HMRC disagree.



I'm just the messenger.

Thanks for the link, that just confirmed my thoughts that she has to declare the annual rent as expense for operating her business.

 

[Paul Kelly ICHYB]

Well spotted Clinton - you learn something new every day!

This is a great example of why all businesses should employ the services of an accountant.

 

[Mr D]

Would she be classed as an employee of the office owner?

 

[Tbozz]

Would she be classed as an employee of the office owner?

No, the office owner do not employ her, and there is no employment contract.

 

[Mr D]

No, the office owner do not employ her, and there is no employment contract.

That may not be relevant.

Treating her as an employee would work. Presumably mans the desk at certain times? Uses equipment that isn't hers?

 

[Adam93]

Rental Expense at market value. However, there will also be income on the same amount so the net position is £nil.

Whether the income element is just additional trading income or it should be treated as employment income would depend on the facts of the case.

 

[Tbozz]

That may not be relevant.

Treating her as an employee would work. Presumably mans the desk at certain times? Uses equipment that isn't hers?

Seems you do not understand the actual situation....
My friend is a self employed virtual assistant
Found an office space for her business
Negotiated rent with the landlord
Both her and the landlord agreed for her to do the reception work for the block in exchange of rent amount.

 

[Mr D]

Seems you do not understand the actual situation....
My friend is a self employed virtual assistant
Found an office space for her business
Negotiated rent with the landlord
Both her and the landlord agreed for her to do the reception work for the block in exchange of rent amount.

Its not me you need to convince.

If they act as an employee then quite possible they will be seen by official bodies as employee.

 

[TheCyclingProgrammer]

Seems you do not understand the actual situation....
My friend is a self employed virtual assistant
Found an office space for her business
Negotiated rent with the landlord
Both her and the landlord agreed for her to do the reception work for the block in exchange of rent amount.

How your friend is remunerated for her time (in this case in exchange for office space for her self employed business) is irrelevant. It sounds to me like she is doing the job of an employee.

Is she under any supervision, direction or control?
Does she use provided equipment?
Does she have set working hours?
Could she send a substitute?

If HMRC decides she was being employed then her “employer” could find themselves liable for unpaid employer national insurance, failure to operate PAYE etc.