Contra Deal Definitions

Contra Deal Definitions

Making use of contra deals can be extremely beneficial to your business, but the actual terminology used to describe a contra deal is often poorly understood. Although the overall concept of exchanging goods and services directly without the need for currency is a fairly simple one to grasp, there are several key terms that need to be fully understood before entering into a contra deal.


Your identity is your professional trading name – the same name you’d put on an invoice. You should also include contact details and an address in this section, as it serves to identify you to the other party and to HMRC (should they need to inspect the deal).

For example: John Underwood, Underwood Plumbing Co., Unit 14, Ravenscroft Trading Estate, Basingstoke. E:, T: 01253 847 927

Value of goods

Although a contra deal does not primarily involve currency, the value of the goods which are changing hands must still be recorded in each party’s accounts. Therefore, it’s necessary to establish the value of the goods and services being exchanged. You should be aware that goods should be listed at a reasonable market value, so contra deals can’t be used to circumvent legitimate trading channels.

For example: One Samsung Series 7 Laptop, value £600 retail

Value of trade

It’s important for both parties to maintain a full record of the transaction, which means that you’ll need to record the goods that you expect to receive in exchange. This needn’t be as detailed as the description you provide for your own merchandise, but should give a clear overview of what the deal is intended to be. If the two elements of the deal are not of equal value, this section should also include details of how the value is to be equalised.

Example: Full MOT of 2003 Ford Escort, services constituting a market value of £300. Payment of £100 and clearance of £200 fees incurred previously. Total value = £600

Description of Goods

Identifying and ensuring that the goods which are being exchanged are the ones described is key to the security of contra dealing. The description of the goods should be specific and note identifying features such as serial numbers, finish, accessories and packaging. This not only to ensure that each partner in the transaction receives the correct goods, but to aid HMRC in checking that the items exchanged are of the value specified.

For example: Fender Stratocaster Electric Guitar, S/N N143345, Year of Production: 1997, Finish: Dakota Red, includes hardshell storage case.

Schedule for Completion

Nobody wants a deal that drags on forever, and especially if you’re counting on a deal to be resolved quickly it can be excruciating waiting for a partner who’s dragging their feet. Agree on a mutually acceptable completion date to ensure that both parties are able to count on the deal being completed.

Example: Goods to be exchanged no later than August 24th 2017