The owner of a boutique beer company says his business is in strife after Inland Revenue ordered him to pay back Covid-19 support funding.
Avondale business Hopscotch could not open during the pandemic lockdowns.
Owner Hugh Grierson got more than $46,000 in government Covid-19 support payments, including the small business cashflow scheme.
Following an audit he was told he must pay some of the money back - with penalties, because Inland Revenue said some of the funds had been spent on stuff it should not have been and incorrect earnings information was used in the application.
But Grierson is not alone.
IRD has asked 513 people who received the Covid-19 Support Payment, the Resurgence Support Payment, and Small Business Cashflow Scheme payments to repay $16.4m.
Grierson told Checkpoint the rules had been unclear when businesses applied and IRD was now "backpeddling" by applying their assessments stringently which was effectively retrofitting the rules, and many businesses would not be in a position to pay that money back.
"That's the problem really. I'm negative monies really at the moment - I can't."
He acknowledged the payments were made from taxpayer funds, and there should be a high bar on their use, but said once the payments were made, businesses had then made decisions about how to respond to the lockdowns which had rested on those payments having being granted.
"I don't think I should have to pay any of it back - I mean what is the point of giving businesses money to keep them afloat and then once they've got through the Covid ... then whipping the money away off them and letting them go down the gurgler? It's a waste of money.
"There's a lot of businesses who - especially because the Resurgence Payment is more of an Auckland problem because we had the last lockdown - there are a lot of businesses who were in dire straits going into the last lockdown, who've done what I've done, because hospo businesses never got back to full speed."
Hugh Grierson says IRD is retroactively tightening how it applies the rules about which businesses should have received Covid-19 support payments Photo: Unsplash / Bence Boros
Grierson said he was still working with IRD on what would happen next.
"I've been trying to negotiate, and because I haven't organised a payback plan there's penalties. But hopefully once we organise the payback plan or whatever happens they might be able to take those penalties away - that's a few thousand dollars at the moment."
How the Covid support payments tripped Hopscotch up
Grierson said a decision by MBIE forced his business to shut down during the lockdowns because of its location.
"I was forced to close and I had my opposition down the road with the doors wide open, so I was unlike any other bottle shop in any other part of the country."
He ran into problems over the figures he chose in his application to demonstrate Hopscotch's turnover both pre-Covid and after the effects of lockdowns had cut into their turnover.
IRD told him the weeks he had used in his application were not adequately representative of an average, and they were effectively cherry picking. But Grierson said the application instructions had not specified an average be used, and there had been widespread confusion about what the process required.
He was also caught out over paying himself a wage.
He said the Resurgence Support Payment had required an agreement that no payments be paid to shareholders because that was dividends, which he had agreed to.
"The problem with that is all the businesses that are self-owned, usually small family firms and one-man bands, they are owners of the company, so they're shareholders.
"So you couldn't give any money from that government money to the shareholder because it's dividends, even if it's wages or to pay back money that you'd loaned to the company to keep it going during the tight time - your personal money - you couldn't do that, you could pay staff."
He had believed continuing to pay himself the same wage he did before he received the payment was fair and would not be counted as dividends.
"I made sure I didn't pay myself any more than I normally pay myself ... I thought I was [complying]."
"I feel like IRD threw things together in a hurry and are now trying to go round and put putty over the gaps and try and claw back any money they can.
He said it was not fair to hold him to account over rules that were not fairly defined in the first place.
"If they'd said to me: 'You can't pick a week, you have to have an average across this period of time', I wouldn't have been able to get the very first payment and I would have gone 'okay, I'm going to have to change how I live with things', and I would have stopped doing deliveries and I just would have spent time fixing up my house and had less income but I would have been fine."
Grierson said the fact his businesses had been audited by IRD had thrown up the problems, but many other businesses would have read the rules the same way and could potentially have the same problem.
"I know there's accountants who have been told off by IRD for giving bad advice - so accountants didn't know what the rules were.
"And I know that 29 out of 29 of my self-employed business customers who come in to my shop they all did the same thing with the Resurgence Payments, because they didn't have any money and they needed to live and their main business expense was paying themselves wages."
