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Darren White

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      • Darren White

        Industry Expert

        @darren-white

        Reply submitted 24/03/20 @ 02:59am

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        Hi Terry. To the questions you’ve posed, yes, as already answered, online filing could be done via Xero but under a separate UK subscription. Otherwise records from within the existing organisation records could be exported and compiled into a ‘manual’ return. It is not necessary to have a UK bank account, but it would be practical to do so to manage payments and refunds, noting HMRC will not pay refunds to a foreign bank account. Ahead of all this, has the existence and scope of your VAT obligation been established? The position is complex, as you have no doubt established.
        HMRC guidance here –> https://www.gov.uk/guidance/vat-and-overseas-goods-sold-directly-to-customers-in-the-uk
        Very broadly,
        If you are selling directly to a UK business customer, they should deal with VAT via the reverse charge mechanism.
        If you are selling goods with a value of < GBP135 directly to UK consumers, you will need to charge VAT, and, as you may be aware there is no minimum VAT registration threshold for non-UK sellers. From 1 January, VAT registration is therefore mandatory for non-UK businesses who make sales to UK customers. As might be expected, we understand there is a backlog of VAT registration applications with HMRC.
        The position for the direct sale of goods with a value > GBP135 is unchanged in that either the customer or the seller is responsible for the payment of VAT depending on the sale terms. Contract terms should therefore be reviewed to ensure responsibility for the payment of import VAT (and duties) is clear.
        If you are selling via an online market place, the outcomes will be different again and can make further comment if this is relevant.
        All the best,

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      • Darren White

        Industry Expert

        @darren-white

        Reply submitted 24/03/20 @ 02:59am

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        Kia ora

        To assist you stay afloat you may want to look at the small business cash flow loan scheme. This could provide a short term loan to your company of $10,000 plus an additional $1,800 for each full-time employee. The loan is interest free if paid back within a year, otherwise interest is charged at 3% for a maximum term of five years. No repayments required in the first two years. Applications are open until 31 December 2020.

        Check here to see if your company is eligible https://www.business.govt.nz/covid-19/small-business-cash-flow-loan-scheme-eligibility-tool/

        Applications are made to IRD through your company’s myIR account, and you’ll need to create an account if you don’t have one already https://myir.ird.govt.nz/eservices/home/_/

        Once registered go to the ‘I want to’ section, and select ‘Apply for the small business loan’.

        If you are eligible, you can expect to receive the loan payment in full from Inland Revenue within five working days.

        All the best.

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      • Darren White

        Industry Expert

        @darren-white

        Reply submitted 24/03/20 @ 02:59am

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        Kia ora. Monthly contract payments to each of the facilitators seems like it would be a practical way to deal with the arrangements you describe. Among many other matters, I’d suggest very clear terms need to be agreed, and documented, on how each facilitator’s profit will be calculated, what percentage they will be entitled to and how often they will be paid. On the basis that you will maintain records of the profit derived from the work of each contractor, you could advise them of this and then get them to issue you the appropriate invoice (based on their profit percentage) in order to get paid. If they are GST registered, they would add GST to the amount invoiced. If they are GST registered you could also discuss the process of issuing buyer-created invoices as already noted. I note your comment that ‘The work is created by the facilitator but ownership belongs to the business’. It would be as well to make sure the facilitators are clear about this up front in your negotiations / agreements with them. All the best.

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      • Darren White

        Industry Expert

        @darren-white

        Reply submitted 24/03/20 @ 02:59am

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        Hi
        What Andy said and, with regard to the structure options, in this situation I’d recommend having as few registrations and trading structures as possible, noting that MSD funding does not require you to have a new business registration to apply. You only need to be starting a new business, or seeking support for an existing business. These can be satisfied under your existing registration. So option 2 above, but do approach MSD. Other funding lines could also be explored but, as per Andy, you could defer draw down until you’ve got positive market validation. All the best.

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      • Darren White

        Industry Expert

        @darren-white

        Reply submitted 24/03/20 @ 02:59am

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        Hi. Great to hear your new business is turning a profit. It’s not clear but I expect you are providing your services personally, as a sole-trader, and do not have a company. If that is the case (and it’s fine if it is), the profits you are earning will be taxed in your own name, at your personal tax rate, and you are entitled to keep the after tax profit. You don’t have to pay yourself a salary or a commission. However, if you are keeping your business and personal money separate (which is recommended), it may be helpful to transfer funds from your business account to your personal account on a regular basis. The amount you transfer should be less than the business profits after taking into account tax to ensure that you leave enough in the business to pay the tax. The amount of tax on your profits will be calculated at 10.5% on profits up to $14,000 and generally the tax will be payable after you file your tax return for the financial year ending 31 March. Best wishes.

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      • Darren White

        Industry Expert

        @darren-white

        Reply submitted 24/03/20 @ 02:59am

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        Hi Amy, as a new business, without prior year comparables, you can determine whether your business has met the 40% decline in revenue assessment for the wage subsidy by comparing your ‘current’ 30 day period against an earlier 30 day period that gives the best estimation of revenue decline related to COVID-19. eg you may look to apply on 31 August and compare revenue for the 30 days to 30 August against revenue for the 30 days to 30 July. That said, following today’s announcement, you may want to wait until further details are released in the new week on an extension to the wage subsidy arrangements. Best wishes.

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      • Darren White

        Industry Expert

        @darren-white

        Reply submitted 24/03/20 @ 02:59am

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        Hi Colin, Revenue means the total amount of money a business has earned from its normal business activities, before expenses are deducted. I would note for the initial subsidy, the 30% or greater decline in revenue needs only to have occurred over 1 month between January and 9 June and not the entire 12 week period covered by the wage subsidy. For the wage subsidy extension, the 50% decline in revenue needs to have occurred in the 30 day period prior to applying when compared to the closest equivalent period last year. All the best.

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      • Darren White

        Industry Expert

        @darren-white

        Reply submitted 24/03/20 @ 02:59am

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        Hi, regrettably for your situation, the wage subsidy extension is not likely to apply as the criteria is currently locked on a reduction in revenue of 50% or more compared to the closest period last year. That said, the initial subsidy had additional criteria added after launch to allow for a reduction in revenue relative to validated forecasts. So, to the extent this may assist you, it would be worth keeping an eye out for any similar additions (if any) to the wage subsidy extension.

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      • Darren White

        Industry Expert

        @darren-white

        Reply submitted 24/03/20 @ 02:59am

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        Hi. Andy’s note is spot on. What you may have picked up was the change to the wage subsidy in late March when the qualifying criteria were changed and some businesses that were less than a year old could then qualify.

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      • Darren White

        Industry Expert

        @darren-white

        Reply submitted 24/03/20 @ 02:59am

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        Hi. Accommodation rental can be passive income, but when provided as part of a B&B would typically be a business. Either way, you are entitled to claim a deduction for expenses incurred in earning your B&B income. Operating as a sole trader doesn’t alter this and is a perfectly fine and normal way to operate. Are you a member of the association?, which has lots of good guidance on operational considerations and relief measures under COVID—19 http://www.bandbassociation.co.nz

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      • Darren White

        Industry Expert

        @darren-white

        Reply submitted 24/03/20 @ 02:59am

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        Hi Ayrton, a very unfortunate situation and many questions arise, as highlighted by Andy.
        As it is an accredited labour-hire company, I expect you were an employee of Extrastaff and based on what you have written it is surprising, to say the least, that they have determined that you resigned on 23/24 March. You indicate having contacted them in connection with holiday pay. Was there anything in your communication that would indicate your resignation? I presume there was some correspondence around the discontinuation of your employment given your approach to MSD in connection with the Jobseeker benefit on 25 March, and it is regrettable that the person you spoke felt that you should pursue the wage subsidy. As per Andy’s comments above, it might be that she confused your status as being self-employed given the contractor arrangement with Frank Miller Electrical, but this contractor arrangement was between the two companies.
        Where Jobseeker is applied for online, MSD will normally look to backdate the start date to the date the online application was started. In this instance, do you have a record of the person you spoke to and the information that was shared so that you might be able to make a case for your own benefit entitlement beginning from 25 March.

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      • Darren White

        Industry Expert

        @darren-white

        Reply submitted 24/03/20 @ 02:59am

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        Hi, everything Andy said, and also wondering if you are able to speak to the right people at other banks. Your diligence in repayment of the initial with your existing bank has clearly not be recognised. That said the government’s Small Business Cashflow loan may offer better than any bank will, but if you don’t wish to pursue this avenue, a bank won’t be the right alternative. The wage subsidy extension will also be available from 10 June, so while still nearly 3 weeks away, this might provide some headroom if you can get to that point. Regards.

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      • Darren White

        Industry Expert

        @darren-white

        Reply submitted 24/03/20 @ 02:59am

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        Hi
        Further to the above, if you haven’t already set up a company, you don’t have to set one up. You could carry on the business as a sole trader, use your own, existing, IRD number, and register for GST in your own name. Carrying on the business through a company would provide limited liability and create a separation between your personal affairs and the business. A company does however come with some set up and running costs and additional admin. If either you or the company registered for GST, this would enable you to recover GST on your expenses – but you would required to charge GST on your sales. In the short term, being registered can therefore be helpful for cashflow as you get GST back on your set up costs but, assuming you are expecting to derive revenue, adding GST will effect how competitive your pricing is and, again, can introduce some additional admin and operating cost. As it seems you are aware, once sales are expected to exceed $60,000pa you would be required to be GST registered. All the best.

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