Download FW CONTRACTOR TRADING

FORTUNE WORKS (FW) CONTRACTOR TRADING
Agreement exists to convert the current method of charging for the work
carried out by the service users from:
It being based on contractors products, to:
time taken to complete the work on the products.
In addition to making FW service ‘portable’ and easier to connect with the CSR
policies of potential customers/contractors this will:
 Greatly simplify the process for FW
 Allow some estimation of time commitments & hence forward planning
 Chime with contractors typical setup whereby the FW service becomes a
defined supplier code to assist them in establishing their cost price.
e.g. Avec (a contractor) need two items put into a flat packed outer and 20
outers put in a case.
FW refers to 22 different Avec stock lines and generates a price for the job
which is a miscellaneous cost to Avec.
Instead there are only 5 timed videos of differing jobs required by Avec. They
select the appropriate video and order that stock code times however many
required, just as they would with any other element of the finished product
being wholesaled by them.
There is a further step, intended to make FW easier to market to new
customer/contractor
FW would be invoicing for service users time, which clearly relates to primary
purpose trading. At the same time, this charitable activity clearly benefits the
purposes of the contractor and as such a bona fide sponsorship event occurs.
If the wording on the invoice was adapted to indicate that e.g. Avec sponsored
the ‘production’ of 200 Video Number 3 ( which shows two items being put
into a flat packed outer), then that company, if it choose to, could record the
FW invoice as payment for sponsorship of a charity.
For contractors this would result in them increasing gross profit (by a reduction
in Cost of Goods Sold) and being able to charge the sponsorship as a legitimate
business costs eliminating taxation on the increased gross profit. This is only
possible as:
 Contractors sponsorship has a direct connection to their business
purposes
 Whilst relating fully to FW’s primary purpose trading.
FW’s VAT position would remain unchanged, as a supply of a Taxable Service
would occur via the exchange of rights to each parties ‘logos’ as part of the
sponsorship package. This relates back to the requirement to adapt the
wording of the invoice.
The invoicing is underscored by the requirement to complete an annual
agreement with each contractor in accordance with the Charities & Trustee
Investment (Scotland) Act 2005.
The above is based on a paper by the Non Profit Organisation Unit of Deloitte
& Touche LLP with reference to the HMRC Guide to Charities Trading &
Business Activities (last update Nov 2015)
J Duncanson
JANUARY 16
fwcontractor trading