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Pig in the middle

19 November 2008
Issue: 4185 / Categories: Forum & Feedback
A company director obtains a reduction to his flat service charges in return for carrying out some construction work. The replies consider the accountant's responsibilities and whether a separate trade is being carried on. Does a tax charge arise and should a money laundering report be prepared?

I have a client who lives in the same block of flats as me — he trades as a limited company carrying out building work. When I was producing his year end accounts to 31 July 2008 I noticed there was no sales invoice raised for a big job he carried out in our development of flats back in March to construct additional car parking spaces. He advised that the reason for this is because he did the work for no charge as a favour to the residents of the block. However I have just seen the accounts for the flat's management company and notice that he paid a reduced charge of £1 for his 2008 service charge on both the flat he lives in and one that he rents out in the same block — the other tenants all paid £1 500 per flat. The entry...

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