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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