Unpaid work

Emrhino

I have a client who is a self-employed builder. He has a friend who is also a self-employed builder. They are not partners but quite often my builder will do work for his mate and vice versa. They do not pay each other.

I am thinking this ought to have some implications but can't think what! CIS would be an issue if a payment had taken place, but it hasn't.

My builder hasn't received income for the work provided but I suppose he has received a benefit 'in kind' which should be taxable.

Any suggestions gratefully received. We both want to account correctly for this but I'm not sure whether there is anything to account for! I haven't come across this before although I'm sure it happens quite a lot...

coojee

Don't know the answers sorry but I know there was some talk of the tax man wanting his share of LETS which is similar, ie people doing work for each other in return for having work done for them by someone else. Don't know what ever came of that.

Emrhino

That's interesting - I've never heard of LETS. I'll get researching!
Many thanks,
Emma

coojee

Stands for something like Local Enterprise Trading Scheme. You join the scheme and then everytime you do work for someone you earn points and then you can use those points to get someone else in the scheme to do work for you. The taxman said he was missing out on tax on the profits that would have been made if they'd declared it as income.

sdv

Emrhino wrote: »

I have a client who is a self-employed builder. He has a friend who is also a self-employed builder. They are not partners but quite often my builder will do work for his mate and vice versa. They do not pay each other.

I am thinking this ought to have some implications but can't think what! CIS would be an issue if a payment had taken place, but it hasn't.

My builder hasn't received income for the work provided but I suppose he has received a benefit 'in kind' which should be taxable.

Any suggestions gratefully received. We both want to account correctly for this but I'm not sure whether there is anything to account for! I haven't come across this before although I'm sure it happens quite a lot...

So long as there are no payments for the services, there are no tax implications. (i believe so long as the payment is less then £1)

If there were taxable implications majority, if not all, grand parents would owe taxman uncollected taxes for baby sitting their grand child/children

Sons, sons in law, daughters, dndaughters in law would be in the same the same position for gardening/diy work for their parents.

So don't worry, there are no tax implications

Paul C

http://www.hmrc.gov.uk/manuals/dmgmanual/html/DMG31001/07_0128_DMG34014.htm

Emrhino

Thanks everyone - most helpful, as always!

Emma