While we wait for the magic-bullets that promise to reduce the impact of COVID – vaccines etc – should we be exploring ways to exchange goods and services with our suppliers and customers?
Barter is defined as: the exchange of goods and services without using money.
Perhaps a decorator could repaint the outside of a local restaurant in exchange for a prepaid voucher for a number of meals once the present restrictions are lifted.
Exchange in this way could help to sustain economic activity without the need to impact the cash-flow of either party.
Obviously, invoices would need to be exchanged and VAT regulations observed and in certain circumstances – if any VAT could not be recovered by one of the parties – then cash flow would be affected.
Likewise, the deemed cost of goods exchanged would need to be a tax allowable deduction to the other party’s business, otherwise tax liabilities may be increased.
Nevertheless, there may be mileage in this approach if the boxes are ticked:
- No VAT issues, and
- No tax issues.
As a bonus, barter would underline support between businesses and create lasting goodwill that will benefit all as we gradually emerge from the threat of coronavirus in the coming months.