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Since the company is carrying the major portion of the expenditure and income of the LETSgo Manchester project on its books, LETSystems, our LETSystem Registry and our LETSgo Development Group were very much at the front of the investigation. Inspectors always begin their investigations by finding out all about the nature of the business and we were very open about the whole thing.
During the course of the investigation, the inspector was shown invoices which include the LETS portion of the transaction, for example pounds sterling 50 plus gmpounds 50 plus pounds sterling 17.50 tax. And she didn't turn a hair.
She said that as long as we declared the value of the transaction on the invoice and drew it up the way we were doing there was no problem at all. It's payment in kind that they don't like. (They have a problem with value added tax if there isn't any value there.)
Towards the end of the inspection, the inspector remarked that we are obviously running a business and can continue to be registered for VAT. This was an important decision for us. While the project is still in the investment stage, it is a significant advantage for us to reclaim the VAT on our inputs - it makes the money go further.
In conclusion, the inspector said that she was quote very satisfied unquote with our record keeping - both the paper trail and our computer procedures. That was the main thing she was checking up on. So our immediate thanks to Alex, Andy M, Adrian, Krysia and Fraser for keeping those records tight when initial circumstances were difficult.
First there is our relief at the approval of our practical procedures. Then comes the reflection that this is further proof of the acceptability of LETSystem trading to government taxation departments. This comes on top of a general acceptance we have found with the Inland Revenue at various district offices regarding income tax.
Whereas it is an unusual case for a Registry to be supported within a VAT-able environment, it is good to know that the gmRegistry conforms to requirements as an embryonic community business.
The implementation of the Development Group with its LETShare arrangements is also confirmed as reasonable and acceptable.
During the investigation LETSystem trading never became a central issue. However, I must add that we are doing LETSystems by the book (Linton 1985 and following, in particular Linton and Soutar 1993).
Those who choose to ignore these published parameters should get their own legal advice and must not rely on any of our experiences in this field.
Make money, pay taxes - but only as much as you need to.
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