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Thread: VAT and trading

  1. #1
    just me duncan drennan's Avatar
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    Jun 2006
    Cape Town
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    VAT and trading

    We have a services business which helps companies and people to develop electronic products. We have some guys who have been working with us as contractors for quite a while now, and they work a fair number of hours each month and are paid on an hourly rate.

    Recently one of the contractors asked for some help with a project and we'll be billing him on an hourly rate too.

    We're VAT registered, and he is not.

    What is SARS perspective on trading hours instead of trading cash for hours? The benefit of that would be that they wouldn't need to pay the extra 14% on our rate, but I suspect that SARS won't be happy about that.

    Obviously we could just keep it all off the record, but both parties prefer to operate legally and in the most ethical way possible.

    Can we trade hours and hence allow them to save the VAT, or do we have to invoice this out and charge VAT?
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  2. #2
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    All of your suspicions are correct; the Act requires that VAT be accounted for in barter transactions.

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