Government U-turn is a boost for self-employed

how the general election 2017 will affect business in lincoln

One of the headlines from March 2017’s Budget was news that the government was planning to increase the amount of tax self-employed people have to pay on their earnings. But with the move proving unpopular, Chancellor Philip Hammond has decided to scrap the measure.

Hammond initially announced he would be increasing Class 4 National Insurance Contributions for the self-employed. The plan was it would rise from 9% to 10% in April 2018, and then to 11% the year after. Hammond initially defended the measure on account of a rising number of people becoming self-employed; and the fact they currently pay a lower level of National Insurance contributions than employed people.

However, widespread outrage at the measure – which would have cost every self-employed person an average of 60p a week – and the fact it went against the Conservative Party’s own manifesto lead to Hammond scrapping these plans a week later. This is great news for self-employed people, who no longer face a tax hike on their earnings.


Sickness Absence During Notice Periods

A question that we are regularly asked concerns what an employer should do as regards pay when an employee, who is signed off sick, resigns giving notice.

Sickness absence can always be a problem for employers; especially so when it happens during a departing employee’s notice period. Assuming that you do not have an Occupational Sick Pay scheme in place many employers believe that it is in order to pay the departing employee statutory sick pay (SSP) only during their period of absence through sickness when they are working their contractual notice, but is this correct?

To determine the answer we must go back to the law and what the Employment Rights Act (ERA) of 1996 states. The Act states that the employer must pay full pay during the statutory notice period where an employee is “incapable of work because of sickness or injury”. In the case of a resignation the statutory notice period is always one week, but in the case of a dismissal effected by the employer, e.g. a redundancy, it is one week for each complete year of service to a maximum of twelve weeks.

So if an employee has say one month’s contractual notice, that includes one week’s statutory notice, this means that the statutory part of the notice period should be paid at full pay and any additional contractual amount may be paid at SSP. The statutory notice is the first part of the notice period and any additional contractual notice follows on.

There is however an exception to the rule. Section 87(4) of the ERA states that the employee’s rights to statutory notice pay does not apply if the contractual notice to be given by the employer is “at least one week more than statutory notice” . This is the case if it is a resignation by the employee or a dismissal by the employer.

This particular situation was examined by the Employment Appeal Tribunal (EAT) in Scotts Company (UK) Ltd v Budd 2003, where Budd (B) was dismissed on three months’ contractual notice after two years’ sickness absence but was not paid any notice pay as he had exhausted all his sick pay entitlement. B was entitled to twelve weeks’ statutory notice as he had been employed for over twelve years, and three months’ contractual notice. He brought a claim for statutory notice pay but the EAT held that Scotts Company (UK) Ltd was not liable for it because B’s employment contract provided for at least one week more than the statutory notice.

Had B only been entitled to receive statutory notice, his employer would have been liable to pay him full notice pay for twelve weeks. It is always the employer’s notice that is looked at to decide if the contractual notice is at least a week more than the statutory minimum.

So, generally speaking, the first week of the notice period should be paid at full pay and the balance paid at your normal sick pay rates, e.g. SSP only. This rule does not apply where the contractual notice you are required to give under the employment contract is at least one week more than statutory notice.

Head of Human Resource at Nicholsons Chartered Accountants Lincoln HR


Making Tax Digital Delayed Until 2020

After the political chaos of the last few months, the government has finally announced their much anticipated backtrack to plans for making tax digital.

The legislation had been billed by HM Revenue and Customs as ‘Making Tax Easier,’ but it has in fact proven to be far more difficult to convince everyone else of this than the government expected. The vision was for all tax paying businesses and individuals to have an online account with HMRC, which they updated quarterly, with a year-end adjustment, hence replacing tax returns and with one submission covering VAT, income tax and corporation tax.

Prior to the election the plans were under scrutiny by the House of Lords, with practical objections being put forward by the CLA, NFU and Treasury Select Committee amongst many others. One of the key concerns voiced was the speed and reliability of rural broadband.

Somewhat inevitably a House of Commons briefing paper was released yesterday amending the timetable for Making Tax Digital; with businesses trading above the VAT threshold being required to keep digital records for VAT purposes only from 2019, which is unlikely to cause any big changes for businesses in the immediate term. Digital record keeping for any other purpose will not be introduced until at least 2020.

The report suggests it is anticipated that approximately 3.5million businesses will be caught up by the digital plans, with 3.4million of those being classed as small or micro businesses. The cost to these businesses of adopting Making Tax Digital is estimated by HMRC to be £280, although it is noted in the document that the Federation of Small Businesses places their estimate at £2,770 per business. The adoption cost is in reality likely to depend on how much a business is prepared to undertake themselves and the choice of software.

One possible major contributor to the hold-up of the project has been the promise from HMRC that there would be basic, free software made available, but it would appear that this has been quite slow to develop.

While in essence the halt to the government’s digital plans was essential with systems being far from ready, it should not stop smaller businesses from reviewing their record keeping. With tidy records it is much easier to ensure all VAT and travel expenses are being reclaimed, and to make sure you collect in all money that is owed to you. There are also significant savings in accountancy costs that could be made with tidier records.

We are always happy to discuss bookkeeping with our clients as we know one system does not fit all and to help put a system in place that works with the way you run your business.


Branding Awareness for Small Businesses

Building a Brand and story for small business

A brand is more than just a visual symbol. It represents more than a logo. Branding at its presence looks into a company’s values, its practices and the culture of the company. Here are things you should know about branding to help you start off with.

Consistency

Branding kicks off with its consistency. From how it presents itself to the audiences, be it physically or digitally, branding in today’s age requires consistency to what it believes in. In this case, values. Branding no longer talks about the huge logo you have on your marketing print, but on the things you do as an organisation. Being consistent and knowing when to move on with times is crucial in creating the brand consistency.

Building the Consistency

Businesses that deal with you will most probably not remember you for your product but for the service you provide. Maintaining the relationship and consistency is key to good branding or a good reputation. Your values and the customer experience is where you create a story about your brand. Share positive feedback on your website, marketing materials and social media to create this story of good branding.

The Story

How do people see your company or how do you want to be seen? As you build towards consistency, bring in the human touch! Engage with your customers. Are there interests that your company has that are similar to your customers? If there are, engage with them to show a different side of the company. If you have a team of employees that love cycling, and a client or potential client happens to have a deep interest in cycling. Why not with engage them through cycling? This is about building and maintaining the relationship. So find that interest!

Emotional Connection

Great story and a budding relationship, businesses build trust through its consistency and the personalities of the people in your company. Showing consistency in the emotional perspective reveals trust, and many businesses want this sense of security on who they are working with. Trust and emotional connections are enhanced when both sides are purpose-driven in achieving a mutual goal.

Personal Branding

Potential buyers or customers want to know more about who they are dealing with these days and will want to know why they should have a business dealing with you. This pretty much relates to emotional connections. This drives us back to the personality. Now, it’s not just you but your employees, happy employees. We’ve all heard how satisfied employees can boost conversion and drive sales. When employees are happy, they would feel proud and understand that accountability that they each hold to protect the sense of belonging and togetherness in the company. Employee engagement and building that branding in them is extremely important.

Be helpful

Finally, be helpful. As simple as that. Help your customers succeed. This is especially true for those who are selling a service or the intangibles. Are there any issues that customers often face and have problems dealing with? How can you help?

Here is a chance for small business owners to make contact and build relationship with their clients or potential clients. Use various platforms to help your customers succeed. Your website, social media and maybe it’s worth asking a local media if they have space or column for you to contribute a monthly article in. Publish articles that will help your customers.

Using images and videos will help give a better user experience when it comes to communicating the content to your target audience. Linking your social media with the content that can help allows them to share their content to people with similar interest and people from the same industry. This can greatly improve your brand awareness.

 


Health and Safety: 4 Things to Consider when Using Ladders and Stepladders at Workplace

Using stepladder and ladder at workplace for health and safety measures

Anyone who comes into regular contact with me knows that I have an obsession as regards the safe use of ladders/stepladders, ensuring that a ladder/stepladder log is maintained, that the ladders are regularly inspected and that these inspections are documented.

There has been a recent case involving Volvo following a fall from a faulty ladder that resulted in the Company being fined £900,000.

In September 2015 a worker was servicing a large delivery truck for Volvo. This included the repair of a rope which was provided to assist drivers accessing the back of the lorry. The rope was about 3.5 metres from the ground and accessible from a stepladder. For unknown reasons the worker fell, striking his head and losing consciousness. He was in hospital for five weeks and has been unable to return to work since.

As is required under RIDDOR, Volvo reported the incident to the Health & Safety Executive. The Inspectors duly visited the premises and inspected the stepladder. They found that it had one anti-slip rubber foot missing and another which was worn. There were no witnesses to the accident, but the HSE speculated that the ladder had slipped and the worker had struck his head on the truck as he fell.

As you might expect, a national firm such as Volvo did have a system in place for regularly checking its ladders and stepladders; the problem was that the system was not being adhered to. They had a ladder register but the ladders/stepladders had not been inspected for more than a year, despite the shortcoming being identified by auditors seven months prior to the accident. This was not the only problem with Volvo’s ladder control system.

The stepladder involved in the accident was not owned by Volvo and the company has been unable to establish how it arrived on site. The untrained employee used equipment which he would have rejected due to its poor condition had he been properly instructed.

My advice therefore is;

  1. Ensure that you have a ladder/stepladder register in place with each ladder clearly numbered and identifiable on the register.
  2. Any employee should be able to identify whether a ladder or stepladder has received a formal inspection in the required time period; in this case once per year but I would recommend more regular inspections than this. The inspection frequency depends on the level of risk and is usually between quarterly and half yearly.
  3. Staff should be instructed to reject equipment with evident defects and to place items in a quarantine area for repair or disposal.
  4. Training should be given to staff as to how to carry out pre-use inspections of ladders/stepladders.

As regards the case in question, Volvo pleaded guilty to breaching s.2(1)Health and Safety at Work etc. Act 1974 and was fined £900,000 plus £5,820 in costs. Volvo had acted promptly after the accident to make improvements and pleaded guilty to the charges against it.

However, the sentencing guidelines introduced in February 2016 take into account a company’s turnover so that despite the company doing everything by the book after the accident, it still received a very large fine. Even non-fatal accidents can lead to very significant fines so it is not a good idea to cut corners.

Please bear in mind; it is relatively straightforward to buy replacement feet for ladders either from the manufacturer or a spare-parts specialist. For the sake of a few pounds there is simply no justification in taking the risk with defective equipment. In the event of you having any doubts about the condition of a ladder/stepladder please break it up (to prevent future use) and throw it away.

Head of Human Resource at Nicholsons Chartered Accountants Lincoln HR


Employee Sues Company for Defamation – Court case for HR

Any correspondence, including e-mails, may lead to actions of defamation if the contents are not true. The High Court has recently considered a defamation claim in relation to emails sent to the employer’s client database which stated among other things that an employee had been dismissed for gross misconduct.

The employee unsuccessfully sued for defamation, but this case acts as a reminder that such correspondence may come under scrutiny by a court and should therefore be always carefully drafted to ensure there is sufficient evidence to support the truth of any allegations made.

It is possible that in the event of an employee, who is close to say a group of key suppliers, being dismissed for gross misconduct then the employer may wish to notify these people so that they know who they should deal with moving forwards.

The High Court has recently considered a defamation claim relating to e-mails of this nature sent to the employer’s client database. The claim was brought by a recruitment consultant, T, against his former employer.

The relationship between T and his employer had deteriorated, partly because T had entered into an intimate personal relationship with KK, a former member of the employer’s team who had moved with another team member, ZC, to a rival firm. A meeting took place at which the employer alleged that T had given confidential information to KK and the rival firm. As a result of this dispute, T’s employment ended, although the precise facts of that termination were disputed – the employer believed it had dismissed T for gross misconduct the following morning, whereas T claimed he had resigned and had been constructively unfairly dismissed.

Over the next few days, the employer emailed over one hundred companies in its client database, and named T, and said that he had been dismissed for gross misconduct. The employer actually sent two versions, a short version and a longer version.

At a preliminary hearing of T’s defamation claim, the Court held

(a) That T had regularly supplied commercially important confidential information about the employer’s business and its customers’ businesses to commercial rivals in breach of his contractual obligations;

(b) As a result the employer had dismissed T for gross misconduct; and

(c) His misconduct was so serious that there were reasonable grounds to suspect it amounted to a criminal offence. The Court went on to hold that it was persuaded, on the balance of probability, that the e-mails had caused harm to T’s reputation of a sufficient degree of seriousness to pass the minimum threshold for a defamation action. T’s claim was therefore permitted to proceed to trial.

At the full trial of T’s claim, the Court held that the employer had a defence to T’s defamation claim because the contents of the e-mails were substantially true. The Court was satisfied that T had passed confidential information to KK and her colleague ZC (and in turn to the competitor firm).

So, in conclusion, although the employer on this occasion was held not to have said anything defamatory about T in its e-mails, please remember that such correspondence may come under scrutiny by a court and should therefore be carefully drafted to ensure there is sufficient evidence to support the truth of any allegations made.

Head of Human Resource at Nicholsons Chartered Accountants Lincoln HR


Impact of the UK Election result on Making Tax Digital, the economy and Brexit.

Impact of the UK Election result on Making Tax Digital, the economy and Brexit.

When speaking to people eight weeks ago it seemed almost impossible that anything other than a significant Conservative win would be the result of the General Election. But I guess Harold Wilson was right when he said “A week’s a long time in politics” and now there is a hung parliament what does that mean for micro, small and medium sized business owners?

Making Tax Digital

I think this is going to be something left in the “in tray” of, Chancellor, Philip Hammond. It’s almost certain to be introduced at some point but I think it’s likely to be postponed whilst other more pressing matters are covered off. Business owners should still be planning for this as I don’t think the postponement will be for long, with the best planning focusing on introducing digital accounting systems. Systems like XERO will help deal with the obligations of Making Tax Digital but also give the opportunity to build efficiencies into systems and procedures.

Economic uncertainty

Brexit and a weak supply and confidence agreement with the DUP mean that further shocks in the economy are likely. How these issues effect the pound, consumer confidence, inflation and growth in the economy is unknown but with a “weak and wobbly government there is sure to be some uncertainty. Whilst it’s a cliche that business hates uncertainty the wheels in the economy will continue to turn. As business owners we need to remain prepared to act if “shocks” effect our business. I wouldn’t advocate preparing 18 month plus plans but keeping a focus on the now and immediate future, watching key measures of performance for your business and monitoring cash.

Brexit

Key questions around Brexit remain unanswered and the muddled political picture is not likely to help negotiations. I think it unlikely that the DUP effect will significantly influence the stance on the key issues however, I do think that there may be a softening in approach to try and align it with public opinion. I don’t think there is much we can do to protect against the negative effects of Brexit because we don’t know there will be any yet. For me focus should be on business as normal with close monitoring of performance and cash.

So whilst the result of the election might seem a disaster I’d not focus on the macro uk view. Instead I’d be focusing on good business disciplines; monitoring performance, controlling cash flows and keeping abreast of changes in the external environment that might impact on the business.

Richard Hallsworth Lincoln Accountant and Business Adviser LinkedIn


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