Compliance Essentials: Compliance Guide 2017 preview by Forum of Private Business

Compliance

Guide 2017 For our members, not for profit

fpb.org CG001 MAY2017

Forum of Private Business Compliance Guide First edition published

2017

Published by

Forum of Private Business Limited

Ruskin Chambers Drury Lane Knutsford Cheshire WA16 6HA Telephone 01565 626001 Email marketing@fpb.org Website www.fpb.org Copyright

All rights reserved other than templates. No part of this publication may be reproduced in any material form, whether by photocopying, scanning, downloading onto computer or otherwise, without the written permission of the copyright owners, except in accordance with the provisions of the Copyright, Designs and Patents Act 1988. Subscribers to the Guide have paid for an update and information service, which is non-transferable. The document itself remains the property of the Forum of Private Business. Any unauthorised or restricted act in relation to this publication may result in civil proceedings and/or criminal prosecution. Disclaimer The Forum of Private Business has taken every possible care to ensure that the information contained in this guide is accurate at the time of going to press, and the publishers cannot accept any liability for errors or omissions, however caused. The information given by this Compliance Guide cannot be taken as an authoritative interpretation of the law. Such an interpretation can only be given by employment tribunals and the courts. Before taking any further action, you may wish to consider taking legal advice. The information contained in this guide is based around the employment rules and regulations as they apply in England. While generally the same regulations apply to Northern Ireland, Wales, and Scotland, please contact the Forum of Private Business should you have specific issues in those areas of the United Kingdom.

Forum of Private Business

Foreword Dear Forum member, The Forum of Private Business becomes ‘40 years in business’ in September 2017 and in that time we have been supporting our members and constantly re-investing our profits into improving the products and services that we can offer as a national UK business membership organisation. As a member of the Forum you are part of a business organisation that is helping to provide business owner’s advice, support and protection to face all different types of business challenges. Since the Forum was established in 1977 business landscapes have changed dramatically but whatever the business challenge we are here to help 24/7. To mark the mile stone of ‘40 years in business’ we have added to our collection of Forum guides. The Compliance Guide 2017 is now the Forums newest guide and is included with the Forum Membership and Forum Start Up Membership. This guide has been researched and put together with the help of our partners rradar and ACRA - The Association of Company Registration Agents. I believe the guide to be very comprehensive and a jargon free easy read. We have referenced areas for further reading and research along with an introduction to where you may need to be to be compliant with your business. The guide is available in digital format only and is exclusively for our members. The Forum believes it is vital to have the right advice, support and protection in place and that means we have to be more than just the average one size fits all businesses advice organisation. Most business owners find that after a few months of trading, they come up against things they didn’t know and need help to overcome them, this is where we at the Forum can help. We want your business to be successful and profitable and we will give you and your business the best chance of succeeding.

Ian Cass Managing Director The Forum of Private Business

Notes

Contents

Forum Compliance Guide 2017 Contents Section 1 - Market Research Section 2 - Business Plan

Section 3 - Company Structure

Section 4 - Registering your Business

Section 5 - Intellectual Property & Data Protection

Intellectual Property 31 Data Protection Act 1998 32 General Data Protection Regulation (GDPR)

Privacy and Electronic Communications Act

Section 6 - Accounts 35 Raising Finance 37 Business Banking 38 Hiring an Accountant 38 Accounting Records 39 Company Accounts 40

Section 7 - Tax 41 VAT 43 Income Tax 44 Self-assessment 44 Corporation Tax 46 Business Rates 46 National Insurance 47

The Forum Compliance Guide 2017

Section 8 - Employment 49 Employment Law 51 Recruitment 51 Contract of Employment 52 Working Hours 53 Wages 54 Disputes & Grievance 54 Dismissal 55 Redundancy 56 Absence 59 Family Friendly Rights 60 Flexible Working Request 60 Auto - Enrolment 61

Section 9 - Insurance 63 Section 10 - Health & Safety

Health and Safety overview 69 Fire Standards 70 Risk Assessments 70 Waste Management 70 Food Safety Act 1990 71 Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH)

Personal Protective Equipment (PPE) 71 Control of Substances Hazardous to Health (COSHH)

First Aid 72

Section 11 - Trading 75 Trading Standards 77 Trading abroad 77 Consumer Credit Act 2006 78 Consumer Contract Regulations (previously, Distant Selling Act)

Consumer Rights Act 2015 (previously, Good and Service License)

Competition Law 79 Warehousekeepers and Owners of Warehoused Goods Regulations (WOWGR)

Forum of Private Business

Contents

Section 12 - Marketing & PR

Marketing 83 Build a Website 84 PR 84 Social Media 85

The Forum Compliance Guide 2017

Notes

Section 1

Market Research

“Many companies do not carry out any market research and then wonder why their business or idea doesn’t succeed.” Jo Thornber, Forum Marketing Executive

Notes

Section 1 Market Research

Section 1 Market Research In order for any business to succeed, reliable research needs to take place to determine if there is enough demand for the product or service you plan to supply. Carrying out no research or biased research, such as from family or friends will almost certainly prevent your business being successful. Markets and trends move fast, by carrying out research you can gain up to date information about customers’ wants and needs, ensuring the product or service is relevant. You can familiarise yourself with the competition and get to know what people are prepared to pay for your product or service, providing a competitive advantage to your business. It also gives your business plan more credibility to secure finance or attract investors. Don’t just carry out research before you start up and assume that is all the research you will ever need to do. Carry out research as an ongoing part of your regular business activity to ensure that you remain aware of what is happening in your sector and retain a competitive edge. We have an online mini guide for you to read through which will provide you with all the information regarding market research, plus lots of useful websites for reference If you decide to use an external market research agency, consult the Market Research Society’s Research Buyer’s Guide www.theresearchbuyersguide.com to find a reputable and experienced agency or consultant. Useful websites: http://www.blueorchid.co.uk/resources/blue-orchid-factsheet-10-tips-on-how-toresearch-your-competitors http://www.smarta.com/advice/business-planning/market-research/competitor-analysis/

The Forum Compliance Guide 2017

Notes

Forum of Private Business

Section 2

Business Plan

“A business plan should be the starting point for every business. The owner will then use this to establish and grow the business over time.” Leanda Hickman, Forum Member Communications Manager

The Forum Start-up Guide 2017

Notes

Forum of Private Business

Section 2 Business Plan

Section 2 Business Plan A business plan is one of the most important documents a new business will have. The plan will show your ideas, targets, and plans for the long-term future of your business and it will certainly show if your business idea is a realistic and workable one. Having the business plan will enable you to work towards securing funding, helping potential lenders and investors understand the vision and goals of the business. It will enable you or the Management Team to focus on the strategy of the business and ensure their strategies fit into the plan. The Business plan is a dynamic document that should be reviewed regularly to measure the performance of your business. What you should include in a business plan:

• Contents

• Financial Requirements and Financial Forecasts

• Executive Summary

• Operational Requirements

• Aims, Objectives, and Vision

• Training Needs

• Business Description and Purpose

• Business Risks

• Legal Structure and Licences

• PEST Analysis

• Management Processes

• SWOT analysis

• Marketing Strategy

• Appendices

• Marketing Plan • Targets and Objectives However, you should tailor your business plan for different audiences to ensure it achieves its purpose. Is the plan to secure funding? To communicate the future plans of the company? Whatever the purpose, each plan will have different requirements, there isn’t a one size fits all. It is important to note that a business plan should be regularly reviewed and updated. It is not just a requirement when starting a business. As your business evolves and grows, go back to your business plan and update it, ensure it is kept relevant. Here are some useful websites with further guidance and templates for you to use: The Forum Guide To Creating A Business Plan http://www.bplans.co.uk/sample_business_plans.cfm http://www.startupdonut.co.uk/startup/business-planning/writinga-business-plan https://www.gov.uk/write-business-plan

The Forum Compliance Guide 2017

Notes

Forum of Private Business

Section 3 Company Structure

“SME’s importance to the economy makeup 99% of businesses in the UK and create 15.06 million jobs, having a collective turnover of £1.753 trillion. Small businesses are the back bone of the UK economy.” Caroline Moore, Forum Finance Assistant

Notes

Forum of Private Business

Section 3 Company Structure

Section 3 Company Structure When starting a new business you need to decide what type of company you want to set up, there are various trading vehicles to choose and over this section, we will explain each of them. How you make your decision should be based on two key factors, risk and tax. The risk is to yourself and the potential loss of your personal assets. The vehicle you choose could either increase or decrease the risk of this happening. You should also speak to a tax adviser or accountant, as they will be able to recommend the right trading vehicle for you and your new business. You can set up and register (if necessary) all businesses yourself through HMRC or Companies House. However, the Forum of Private Business recommends you set up your business through an ACRA accredited registration company. Not only will they take care of the set up for you but they offer additional advice, support and help with legal requirements once your business is set up. You will not get this additional help if you register yourself through Companies House. The main trading vehicles available when setting up business are:

• Private Company Limited by Shares • Sole Trader • Limited Liability Partnership • General Partnership • Limited Partnership

Private Company Limited by Shares Advantages Company is a separate legal entity. The company will be able to own assets and enter into contracts in its own right. The company will be able to raise debt finance or capital finance. Capital can be raised by selling shares. Disadvantages Initial incorporation fee.

Procedural obligations at incorporation such as implementing the articles of association. Corporation Tax requirements. Annual filing and accounting obligations.

The Forum Compliance Guide 2017

Sole Trader Advantages No requirements to make information regarding the business public. Setting up a sole trader is quick, easy and involves no cost Simple accounts to be sent to HMRC. Complete control over the business Disadvantages You are personally responsible for any debts. High Taxes Personal credit rating can have consequences on the business’ credit rating. Business may appear less well established than a company. May find it difficult to raise funds for the business

Limited Liability Partnership (LLP) Advantages No corporation tax LLP is a separate legal entity, therefore, members have limited liability. No share capital, therefore, members are under no obligation to contribute capital. LLP agreement is a confidential document and does not have to be made publically available. Disadvantages Financial accounts must be submitted to Companies House for public record. LLP must have at least 2 members, if one leaves the LLP may have to be dissolved if a new member is not found. Profit cannot be retained in the same way as a Company Limited by Shares. All profit is effectively distributed with no flexibility to hold over profit to a future tax year.

General Partnership Advantages The more partners, the more potential to raise finance. Partnerships are less strictly regulated than companies, in terms of the laws governing the formation and are far more flexible in terms of management, as long as all the partners can agree. Partnerships can split the work according to their skills. Straightforward to set up, (Partnership agreement is recommended) Basic accounts to be submitted to HMRC.

Forum of Private Business

Section 3 Company Structure

Disadvantages No separate legal status. Disagreements can occur between partners Taxation laws mean that partners must pay tax in the same way as sole traders. Partners are also required to register as self-employed with HM Revenue & Customs. The current laws mean that if the partnership (and the partners) bring in more than a certain level, then they are subject to greater levels of personal taxation than they would be in a limited company. This means that in most cases setting up a limited company would be more beneficial as the taxation laws are more favourable.

Limited Partnership Advantages Limited personal liability for the limited partners. Disadvantages Have no say in the running of the business General partners are personally liable.

IMPORTANT: The main source of law regulating companies is the Companies Act 2006. This is a considerable piece of legislation containing 1,300 sections and creating almost 100 offences which can be committed by the company, the officers and/or the directors of the company. How does this affect your business? http://startups.co.uk/what-the-companies-act-2006-means-for-you/

Useful websites: https://www.gov.uk/set-up-business

The Forum Compliance Guide 2017

Notes

Forum of Private Business

Section 4 Registering Your Business

“Did you know that there are approximately 21,000 statutory rules and regulations that apply to businesses?” Phil Vibrans Managing Director, Company Registrations Online

The Forum Start-up Guide 2017

Notes

Forum of Private Business

Section 4 Registering your business

Section 4 Registering Your Business The way you have to register your business will be determined by the company structure you choose for your business. Company Structure

How to register

Private company limited by shares

Incorporated at Companies House

Sole Trader

Limited Liability Company

Incorporated at Companies House

General Partnership

Limited Partnership

Incorporated at Companies House

To register your business with HMRC visit https://www.gov.uk/new-business-register-for-tax to complete this process. This also applies if you are starting up your small business in addition to another job. Incorporation is the process of registering a new company with the Registrar of Companies (Companies House) under the Companies Act 2006. Once you have been incorporated, Companies House will notify HMRC, so there is no need to contact them yourself. However, you must register your company as ‘active’ for corporation tax within 3 months of starting to trade. https://online.hmrc.gov.uk/registration/newbusiness/introduction You can set up and register (if necessary) all businesses yourself through HMRC or Companies House. However, we recommend you set up your business through an ACRA accredited registration company. Not only will they take care of the set up for you but they offer additional advice, support and help with legal requirements once your business is set up. You will not get this additional help if you register yourself through Companies House. Our chosen approved company registration partner Company Registrations Online will progress the application for you and also provide the support and information needed once you have received your Certificate of Incorporation, this support is not provided by Companies House if you register directly with them. The drafting of registers, minutes and share certificates is left to the customer if you register directly and you will be required to spend further time or cost in bringing these documents up to date. Furthermore, Companies House does not provide any further assistance or advice in completing statutory documentation. The maintenance of such documentation is a legal requirement, and failure to keep up to date registers and minutes for a company is a criminal offence. Therefore we highly recommend using a company registration agent.

The Forum Compliance Guide 2017

Notes

Forum of Private Business

Section 5

Intellectual Property & Data Protection

“An employment lawyer typically costs £120 per hour. 24/7 Employment Advice is included in your membership.” Gary Gallen, Rradar Founder and CEO

Notes

Forum of Private Business

Section 5 Intellectual Property & Data Protection

Section 5 Intellectual Property and Data Protection 5.1 Intellectual Property Intellectual Property (IP) is something that has been physically created such as artwork, literacy, music. It could be the name of your product, your company logo or publications you produce. Almost every business will have some form of Intellectual Property, which is a valuable asset and should be protected and exploited. You/the business own the Intellectual property if you have created it or bought the rights from the previous creator or owner. You should ensure that your business owns all rights in its Intellectual Property and protect your Intellectual Property rights and confidential information. Protecting your Intellectual Property makes it easier for you to take legal action against anyone who tries to steal or copy it. IP is protected by Copyright, Patents, Designs and Trademarks, some of these are automatic, others you have to apply for. Automatic Protection

Examples

Writing and literary works, art, photography, films, TV, music, web content, sound recordings

Design right

Shapes of objects

Protection you have to apply for

Examples

Time to allow for application

Trade Marks

Product names, logos, jingles

4 months

Registered Designs

Appearance of a product including, shape, packaging, patterns, colours, decoration

1 month

Patents

Inventions and products, e.g machines and machine parts, tools, medicines

Around 5 years

To find out more visit your local Intellectual Property office. To find your nearest office visit https://www.gov.uk/government/publications/uk-patlib-network/uk-patlib-contactinformation

The Forum Compliance Guide 2017

5.2 Data Protection Act 1998 In the course of employment, you will typically obtain, process and store personal data (including sensitive personal data) about your employees. For data protection purposes, this makes you a data controller (and data processor), and the employee a data subject, in each case with corresponding rights and obligations. The Data Protection Act 1998 (the Act) has established the rules for anyone keeping, using or processing personal information about individuals. Most small firms process personal information and it is important for business owners to understand their legal obligations under the Act. The Act defines personal data as any information about a living individual that enables someone else to identify them, either:

• From that information alone, or • In conjunction with other information that they may be able to access. ‘Data’ refers to information that is held on computers, in paper filing systems, and on other media - for example, on CCTV or call recording systems. It also includes any recorded facts and opinions about individuals. Any individual, business or organisation that processes personal data about individuals must comply with the requirements of the Act. Processing data includes collecting, recording, keeping or using personal information about other people. The legal responsibility for compliance rests with the ‘data controller’. This is usually considered to be the organisation or business that determines why and how the data is processed. https://ico.org.uk/for-organisations/guide-to-data-protection/Gdpr – 2018

IMPORTANT changes: The rules around data protection are changing. From 25th May 2018 it will be known as the ‘General Data Protection Regulation’ (GDPR).

5.3 General Data Protection Regulation (GDPR) GDPR aim is to increase rights for individuals and give them back control of their personal data. The changes are needed as the current data protection laws were drawn up in 1995, before mass internet adoption. The ‘right to be forgotten’ is being extended to all aspects of online life – so someone could ask Facebook or another social network to delete their profile entirely. The new regulations will be enforced from May 2018, so businesses now have under a year to ensure they will meet and adhere to the new regulations. Failure to comply means businesses

Forum of Private Business

Section 5 Intellectual Property & Data Protection

of all sizes could be subject to fines of up to 4% of annual worldwide turnover or €20 million – whichever is greater. Many of the GDPR’s main concepts and principles are much the same as those in the current Data Protection Act so if you are complying properly with current laws then most of your approach to compliance will remain valid under the new regulations. However, there are some new elements. For more information please take a look at the Information Commissioner’s office website: https://ico.org.uk/for-organisations/data-protection-reform/overview-of-the-gdpr/

5.4 Digital – Privacy and Electronic Communication Regulations The Privacy and Electronic Communications (EC Directive) Regulations 2003 (as amended in 2011) (the Regulations) set standards for the use of electronic marketing, including the use of electronic mail (such as e-mail, SMS and picture and video messaging) fax and automated calling systems. They also regulate the use of Internet tracking software (including cookies). The Regulations apply to all businesses that send direct marketing messages by electronic means, including by an automated calling system. The Regulations also apply to any business that uses cookies or similar Internet tracking software. The Regulations state that electronic mail or fax marketing messages may not be transmitted to an individual consumer without their consent, except where their details were obtained through a sale or negotiations for a sale, the messages are about similar products or services and the consumer has been given the opportunity to opt out of receiving the messages when the details were collected and in every subsequent communication. Similarly, cookies may not be used unless the consumer is given clear information about their purpose and the opportunity to refuse or remove them. Useful websites: https://ico.org.uk/for-organisations/guide-to-pecr/ http://www.legislation.gov.uk/uksi/2003/2426/contents/made

The Forum Compliance Guide 2017

Notes

Forum of Private Business

Section 6 Accounts

“As a member of the Forum of Private Business you will have exclusive access to business banking comparison site with yourbusinessmoney.co.uk” Jane Connors, Forum Finance Director

Notes

Forum of Private Business

Section 6 Accounts

Section 6 Accounts 6.1 Raising Finance If you want to start a new business or indeed grow your current business, chances are you’re going to need to raise finance to help you achieve your goals. This may be for premises, to pay staff, buying equipment or indeed developing your product. There is numerous way in which finance can be raised. What you need to decide is which route is best for you and how you are going to successfully secure the finance. Firstly you must develop a targeted proposal (Business Plan). All providers of finance will need to be convinced about the viability of the business, you must produce a robust business plan that explains clearly how the business will operate and why the finance is required, and when they can expect their investment back! Consider all available options for raising finance, there are various sources of finance available, the most likely options will be:

• Personal savings and informal loans from family or friends • Bank loans and overdrafts -Take a look at our guide – Getting your bank manager to say yes! • Credit cards • Private equity investors, including business angels • Crowdfunding, where money is raised from large numbers of investors • Government funding schemes • Local authorities • Responsible Finance Providers (RFPs) • Credit unions • Pension-led funding After speaking to our members, we discovered there was a lack of reliable advice when it comes to alternative finances. So we teamed up with one of our partners, Alternative Business Funding and have added a new online tool called ‘Funder Finder’. This is designed to support members to find the best source of funding for their business. By scanning the market to find the finance option which best suits your business, it provides quick quotes and access to expert advisers. Take a look at our Funder Finder Useful websites: http://smallbusiness.co.uk/a-guide-to-raising-money-as-a-small-business-2493221/ http://www.thisismoney.co.uk/money/smallbusiness/article-2616644/How-I-fundingbusiness.html http://british-business-bank.co.uk/

The Forum Compliance Guide 2017

6.2 Business Banking When you have incorporated a company you must remember that the company is a separate legal entity from you, even if you are the only shareholder and director. You will, therefore, need a business bank account to separate company money from your personal money. Although not a legal requirement, it is also beneficial for Sole Traders and General Partnerships to open a business bank account as it will make it easier to distinguish income and expenditure for your business and keep your personal finances separate. Setting up a bank account To open a new business bank account:

• the bank will require, amongst other things, a copy of the Certificate of Incorporation (not applicable for Sole Traders or General Partnerships);

• the bank will ask for information from the directors in order to carry out money laundering and identity checks;

• consider who will be the cheque signatories (this may be referred to as the bank mandate) the bank will require sample signatories from those directors; and

• the bank will require the company to pass certain resolutions at a meeting of the directors (board meeting). (Not applicable for Sole Traders or General Partnerships). Whilst you are likely to do your banking online, it might be helpful to choose a bank with a branch that is local to you, or easily accessible by you as this will make it easier if you need to visit the bank. Having a separate bank account will make it easier to keep accounting records, to prepare company accounts and to produce information for your accountant and/or HMRC as required. Remember that you will be entering into a contract with the bank so take the time to read the terms. Useful websites: https://www.moneysupermarket.com/current-accounts/business-bank-accounts/ http://www.money.co.uk/current-accounts/business-bank-accounts.htm

6.3 Hiring an accountant Hiring an accountant is an investment that will really make a difference to your company’s growth as their expertise and knowledge is invaluable. Ensuring you have a good accountant will help you overcome any initial hurdles and stop you making costly mistakes. They will keep your financial records and manage your VAT and PAYE requirements.

Forum of Private Business

Section 6 Accounts

Your accountant is likely to be your most trusted business adviser, so it is worth taking the trouble to make the right decision when choosing which accountant or accountancy practice to use. In the long run, it could save your business a lot of time, effort and money and if you’re paying an accountant, you should receive a first class service, no matter how small or established your business is. Useful websites: www.find.icaew.com http://www.startupdonut.co.uk/startup/tax-and-national-insurance/accounting-andbookkeeping/q-a-choosing-an-accountant

6.4 Accounting Records A Company must keep accounting records, at any time the records must be sufficient to:

• Show the transactions (e.g. money in and out, and all the company’s assets and liabilities) • Show the financial position of the company; and • Enable the directors to prepare Companies Act Accounts or IAS individual accounts Accounting records can be kept:

• Daily, or at least as accounting entries arise. In the very least accounting entries should be recorded within a reasonable time;

• As paper records or electronically; and • By you or by a bookkeeper or accountant The Institute of Chartered Accountants (ICAEW) for England and Wales has produced guidance for directors on accounting records under the Companies Act 2006 which includes the following:

• Accounting records should comprise an orderly, classified collection of information capable of timely retrieval, containing details of the company’s transactions, assets and liabilities.

• An unorganised collection of vouchers and documents will not suffice. • You must keep accounting records for 3 years. • It is a criminal offence to fail to keep adequate accounting records. ICAEW full guidance http://www.icaew.com/-/media/corporate/files/technical/technical-releases/legaland-regulatory/tech-01-11-guidance-for-directors-on-accounting-records-under-thecompanies-act-2006.ashx?la=en

The Forum Compliance Guide 2017

6.5 Company Accounts Directors must prepare company accounts for each financial year. A company produces accounts by reference to the accounting period which ends on its Accounting Reference Date (ARD). Unless it is changed, the ARD will be the last date of the month of incorporation. For example, if the date of incorporation of the company is 8 October 2000 the ARD will be 31 October. Generally, each accounting reference period is 12 months but the company can change the ARD by making it longer or shorter. Some companies change the ARD to tie in with the corporation tax financial year but this is entirely discretionary. To change the ARD - submit a form AA01 to Companies House before the filing deadline for the accounts of the period that is to be changed. Format of the company accounts The company accounts comprise:

• a profit and loss account; • a balance sheet; and notes to the accounts. • The accounts must be prepared in accordance with either: • Section 396 of the Companies Act 2006 (called Companies Act Accounts); or • International Accounting Standards as adopted by the EU (called IAS individual accounts). The format of the company accounts is set out in various regulations. Dormant companies, small companies and medium companies may omit certain information and file abbreviated accounts. If your company is a small company you may file unaudited accounts with the Registrar of Companies (Companies House). You need only file an abbreviated balance sheet and notes and must include certain statements above the director’s signature. Time period for filing company accounts For the first company accounts:

• if the accounting period is more than 12 months, nine months from the first anniversary of the company’s incorporation or three months after the ARD (whichever is later); or

• if the accounting period is less than 12 months, nine months from the ARD or three months from the date of the notice altering the ARD (whichever is later). Thereafter, nine months from the ARD. NOTE: Sole traders and general partnerships do not need to submit company accounts but you do need to keep accounts so you can work out the profit and loss for your tax return and show to HMRC if requested.

Forum of Private Business

Section 7 Tax

“Tax is taxing for small business owners and costs SME employers £5.7 billion per year. A tax investigation can cost around £4,000 for a small employer BUT our members pay on average 50% less for tax compliance than other businesses.” Jo Bostock Forum Senior Business Adviser

Notes

Forum of Private Business

Section 7 Tax

Section 7 Tax 7.1 VAT Value Added Tax (VAT) is a tax levied on the sales of goods and services. In other words, on the price difference between what you’ve paid and what you charge for the product/service. You charge VAT on the goods or services you sell to other businesses and customers (if you are VAT registered). The concept is the VAT you pay and the VAT you charge roughly equals out - if it doesn’t, you pay the balance to HMRC. That’s what your VAT return is for. If you’ve paid more VAT that you have received from sales, HMRC will reimburse you. You will be required to register for VAT with HMRC if your taxable turnover exceeds the threshold which, as at 1st April 2017, is £85,000.00. This excludes the value of any capital assets – buildings, vehicles or equipment that you have sold. VAT is charged at different rates according to the category of goods and services supplied, and some supplies are exempt from VAT altogether.

• Standard rate: Now 20%, and applied to all goods and services which do not fall into the other three categories below.

• Reduced rate: A rate of 5% that includes fuel and power used in homes and by charities. • Zero rates: Charged on most food (but not a restaurant or takeaway meals), children’s shoes and clothing, prescriptions, books and newspapers, new house sales and prescriptions. If the only goods you supply are zero-rated, you may not have to register for VAT – but you do have to apply for exemption from registration.

• Exempt supplies: Including education, finance, insurance, find-raising events by charities, membership subscriptions and most of the services of doctors and dentists (but not some other services, such as osteopaths). There is no VAT charged on exempt supplies. If you only supply exempt services, you cannot usually register for VAT. However, if you are VAT registered and have some exempt supplies, you may have difficulty claiming back all your input tax. To register for VAT https://online.hmrc.gov.uk/registration/newbusiness/business-allowed

NOTE: The legislation covering VAT is complex and it is important to seek professional advice or contact HMRC for guidance to ensure compliance with current law.

The Forum Compliance Guide 2017

7.2 Income Tax Income Tax is usually deducted automatically from wages, pensions and savings. However, If you are self-employed, a sole trader or a company director you must pay income tax using a self-assessment tax return. This is a system HM Revenue and Customs (HMRC) used to collect Income Tax. Once registered with HMRC as self-employed you will automatically be sent a self-assessment tax return form. To register for self-assessment https://www.gov.uk/government/organisations/hm-revenue-customs The table shows the tax rates you pay in each band. Tax year 2017-18 (England, Wales or Northern Ireland) Band

Taxable Income

Tax Rate

Personal Allowance

Up to £11,500

Basic rate

£11,501 to £45,000

20%

Higher rate

£45,001 to £150,000

40%

Additional rate

Over £150,000

45%

Band

Taxable Income

Tax Rate

Personal Allowance

Up to £11,500

Basic rate

£11,501 to £43,000

20%

Higher rate

£43,001 to £150,000

40%

Additional rate

Over £150,000

45%

Tax year 2017-18 (Scotland)

You may want to get an accountant to help you with complete your tax return, read our guide on Choosing the right accountant.or refer to section 6.3 Hiring an accountant

7.3 Self-Assessment Tax self-assessment is the method used by HM Revenue & Customs (HMRC) to collect income tax and some types of National Insurance Contributions (NICs) annually through a tax return. Tax is usually collected automatically through wages; this is called Pay As You Earn (PAYE). However, anyone who has sources of income that have not been taxed under PAYE must

Forum of Private Business

Section 7 Tax

complete a self-assessment return and submit it to HMRC. This normally relates to sole traders or partners who are running a business on a self-employed basis. However, some individuals with investment or rental income, and company directors must also account to HMRC under self-assessment by declaring their personal income. Who must register with HMRC for self-assessment All Sole traders, General Partnerships and company directors must contact HMRC to register for self-assessment when starting up their business. https://www.gov.uk/government/ organisations/hm-revenue-customs As a best practice, sole traders must register for tax self-assessment with HMRC as soon as possible after starting to trade, and at the latest by 5 October after the end of the tax year for which a tax return is needed. For example, anyone starting to trade between April 2015 and March 2016 must register by 5 October 2016. Failing to register can result in a penalty of £100 and further penalties for trading illegally and not paying tax. For a full list of who need to complete a Tax Self-assessment for visit https://www.gov.uk/self-assessment-tax-returns/who-must-send-a-tax-return Registering for self-assessment The registration process takes at least 10 working days to complete as it involves HMRC posting out a 12-digit activation code, which is required when logging on to the online account. Anyone registering for self-assessment is also issued with a 10-digit Unique Taxpayer Reference (UTR) and a user ID (also known as a Government Gateway Account), and can then create a password and report details of any earnings from self-employment or income as a company director by completing an online tax return each year. Following registration for self-assessment, sole traders and partnerships must keep full and accurate records of all business sales and expenses as well as details of personal investment income so that a tax return can be completed in due course. The bill Once you’ve filed your tax return you will get a bill of the tax you owe. If you complete your self-assessment form online, you can view your bill before you submit the form, in the ‘view your calculation’ section. Once you have submitted your return, it can take up to 72 hours to receive the bill in the final tax calculation. HMRC will send your bill by post if you did a paper return. To register for self-assessment visit https://www.gov.uk/register-for-self-assessment/overview

The Forum Compliance Guide 2017

7.4 Corporation Tax Corporation tax, is quite simply, a tax on company profits. Corporation tax is charged on the taxable profits of limited companies, as well as on those of some clubs, societies, associations and co-operatives. However, it does not apply to sole traders or partnerships. Corporation tax is currently at 19% of your company taxable profits (as of April 2017). It is to be reduced to 17% in 2020. Taxable profit is the amount of profit remaining after the deduction of tax allowable expenses and reliefs. Corporation tax is calculated on various different types of taxable profits and chargeable gains including: Trading profits - the income from the company’s trading activities after allowable expenses have been deducted. Capital gains - the chargeable gain or profit made when a company asset such as land or buildings is sold. Any other income - for example, money made from leasing land or buildings or interest on company savings. The tax is payable 9 months and 1 day after your companies accounting year ends, if your profits are £1.5million or less. Profits above £1.5million must be paid in instalments. You will not receive a bill for Corporation Tax, you are responsible for working out the tax due and paying it. You must register for Corporation Tax through HMRC, this must be done no later than 3 months after starting your company. You must also file a Company Tax return and include any supporting documents. This is due within 12 months of the end of your financial year. This deadline is known as ‘statutory filing date’. Failure to file your return by the deadline will result in an automatic penalty.

7.5 Business Rates Just like residents pay council tax, businesses have to pay business rates to their local authority. The rates are paid by businesses that occupy non-domestic buildings. Whoever occupies the building, either the owner of the building or the leaseholder must pay the rates. If you occupy only part of the building for your business, you will have to pay rates for that part of the building. For example a shop with a flat above, the shop will be charged business rates. You may also be required to pay business rates if you work from home. This is more likely if you use a room exclusively for business or have had a room adapted for work purposes. Annual business rates bills are issued on 1st April for the year ahead. Firms can pay in full or by monthly instalments. Make sure you tell your local council if you start up a new business or if you move premises, so they can charge you the right amount. Failing to pay business rates could result in the local billing authority taking you to court to recover the debt.

Forum of Private Business

Section 7 Tax

You will be sent a business rates bill in February or March from your local council. You DO NOT have to pay business rates on:

• Farm buildings and land (excluding buildings used as offices or for other business activities) • Fish farms • Places of public religious worship (except in Scotland – you apply for relief for these buildings instead of being exempt)

• Buildings used for training or welfare of disabled people (except in Scotland – you apply for relief for these buildings instead of being exempt) Changes post 2017 budget

•

Due to ‘revaluation’, many small business will loose their rate relief. However, the Government have capped any increase to £50 a month.

•

Pubs will also recieve a £1000 discount on their bill, this applied to all pubs with a rateable value of less that £100,000

•

Local authorities will also have their share of £300m fund to offer discretionary relief in local areas. Useful website: https://www.gov.uk/introduction-to-business-rates/overview

7.6 National Insurance National Insurance (NI) is a system of compulsory contributions paid by employers and employed people (including company directors) and self-employed people. Employed and self-employed individuals are liable for different types (or classes) of National Insurance Contributions (NICs), which qualify them for different types of state benefits such as the State Pension, Jobseeker’s Allowance and Incapacity Benefit. As an employer, you must pay National Insurance contributions, on your personal earnings, your employee’s earnings, and the benefits you provide to your employees. Under HMRC rules, you have to pay NICs for any employees who earn more than £113 per week as of April 2017. For NI purposes, earnings include salaries, wages, overtime, shift pay, tips (if they are allocated out of a communal pot), absence pay, expense allowances and compensation payments. The NICs for each of your employees should be calculated, and deducted, at the same time through PAYE when you do the payroll. Once each calculation has been made, you must pay the required amount to HMRC. You must pay your NICs to HM Revenue and Customs (HMRC) by the 22nd of the month (or the 19th of the month if paying by cheque through the post). There are many ways in which you can pay the National Insurance bill, visit https://www.gov.uk/pay-paye-tax to see which option is best for you. For a complete guide to national insurance visit https://www.gov.uk/government/publications/cwg2-further-guide-to-paye-and-national-

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Notes

Forum of Private Business

Section 8 Employment

“Our Employment Guide gives an eight stepby-step guide for small businesses on how to employ, manage and get the best from your staff. ” John Kilbey, Forum Senior Business Adviser

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Forum of Private Business

Section 8 Employment

Section 8 Employment 8.1 Employment Law Employment law gives employees’ rights and entitlements in relation to their employment. The law covers a vast area – from employment contracts to dismissal and everything in between. Complying with employment law keeps your workforce happier and more productive, and saves you the cost of stress and employment tribunal claims.

The Forum’s members help desk will support and guide you through any employment law issues or questions you may have. Please also refer to your Employment Guide.

8.2 Recruitment Recruiting new staff can be one of the most demanding challenges faced by a business owner, especially when it is being done for the first time. But hiring people is key to the growth of any business. You can build your business faster by developing a strong team, rather than doing all the work yourself! The need to recruit staff usually arises when a business expands, increases its workload, needs someone with specific skills, or when a staff member leaves and needs to be replaced. An effective recruitment process will help to ensure the business owner selects the best person for the job and fulfils its legal responsibilities as an employer. There are processes that an employer needs to take into account when considering recruiting staff, the laws that apply and the information needed to be collected from new employees. Useful websites http://www.startupdonut.co.uk/employees/hiring-employees/hiring-employees-overview http://www.simplybusiness.co.uk/microsites/hiring-your-first-employee/ https://www.gov.uk/employing-staff

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8.3 Contract of Employment The contract of employment is the cornerstone of the employer/employee relationship. A comprehensive written contract of employment should ensure a harmonious working relationship. Setting out the obligations towards one another. You are under a legal duty to provide employees with a written statement of main employment particulars (contract of employment) within two months of the start of their employment with you. If you fail to provide a contract you are breaking the law and will be liable to a penalty. Contracts should normally include the following: 1. Name and address of employer and, if different, the registered address 2. Name and address of employer 3. The commencement date of employment 4. Probationary period 5. Job Title/Position 6. Place of work 7. Remuneration 8. Working hours 9. Holidays 10. Sickness absence pay 11. Other absences from work 12. Pension provision 13. Retirement 14. Terminating the contract 15. Disciplinary procedure 16. Grievance procedure 17. Other matters Two copies of the contract should be sent to the employee. Both copies to be signed by the employee and someone with authority to sign on behalf of the company. One copy should then be retained by the employee, the other copy retained in the employee’s personnel file. Useful websites http://www.lawdonut.co.uk/business/law/employment-law/recruitment-andemployment-contracts/employment-contracts#section-3 http://startups.co.uk/written-particulars-of-employment-what-you-need-to-know/

Forum of Private Business

Section 8 Employment

For more information on introducing a new employee please contact the forum’s member helpline on 01565 626001

8.4 Working Hours There are various contracts of employment with regards to working hours. Knowing the different types can help determine what contracts you should be offering your employees. Full time This is the most common type of employment contract and is generally offered for permanent positions. There is no set minimum number of hours that you must work on a full-time contract. However, most employers recognise full-time work as 35+ hours per week. Part time Those on a Part-time contract work fewer hours than a full-time employee but their contract contains many of the same details as their full-time counterparts. Fixed term Fixed-term employees can be brought in to cover for permanent staff on long term sickness or maternity leave or to cope with increased seasonal demand. The contract will have a start and an end date. Temp Similar to fixed-term, temporary contracts are offered when a contract is not expected to become permanent. Usually, they would have some form of end date included, however, these may be subject to change. Despite their short-term status, temporary workers are entitled to the same rights as any other member of staff. Agency As an employer, you can hire temporary staff through agencies or recruitment consultancies. You pay the agency (including NI and SSP) and the agency then pays the staff. If the employee is employed by you for 12 consecutive weeks they are entitled to the same rights as permanent employees such as rest periods, breaks and annual leave. Freelance and contractors If you take on a freelance or contractor they are generally considered self-employed. This means they are responsible for looking after their own Tax and NI contributions. They are not entitled to the same rights as permanent employees but they do manage their own schedule and negotiate their own terms.

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Zero hours contract- Known as casual contracts, Zero hour contracts specify that an employee works only when required by their employer. The employer is under no obligation to provide a set amount of hours to work. And, similarly, the employee does not have to accept any work that is offered to them. Zero hour workers are, however, entitled to the same annual leave as permanent workers, and their employer must pay them at least the National Minimum Wage. Individuals on a zero hour contract may also seek employment elsewhere. In fact, their contract would not be valid if it prevented them from looking for, or accepting, work from another employer.

8.5 Wages All employers in the UK are required by law to pay most workers at least the National Minimum Wage (NMW). From 1 April 2016, the Government introduced a National Living Wage that must be paid to all workers aged 25 and over. No employer is exempt from paying the NMW, regardless of the size of their business or organisation. It is a criminal offence to pay eligible employees less than the National Minimum wage. From 1 April 2017, the hourly National Minimum Wage rate is:

• £7.50 for workers aged 25 and over (the ‘National Living Wage’). • £7.05 for workers aged 21-24. • £5.60 for workers aged 18-20. • £4.05 for workers aged 16-17. • £3.50 for apprentices aged 19 or under and for apprentices of any age who are in the first year of their apprenticeship. All other apprentices must be paid the NMW for their age. Apprentice NMW rates only apply to workers who are working under an apprentice contract or employed on a government-funded apprenticeship scheme. The NMW is reviewed annually by the Low Pay Commission. The rates will change every April, starting April 2017. To ensure you are paying the correct NMW or NLW go to https://www.gov.uk/minimum-wage-calculator-employers

8.6 Disputes & Grievance A key element of your role as an employer is to set, monitor and maintain standards. Many problems start with a simple misunderstanding that could have been corrected on the spot. You do not have to tolerate poor performance, but you do have to use the correct procedure to ensure standards are enforced correctly and in line with legislation. As an employer, you may have to take disciplinary action against an employee in situations such as misconduct or poor performance. Examples include persistent absenteeism, rudeness towards customers, failing to follow established work procedures or failing to meet required standards of work. A grievance is a concern or complaint raised by an employee. Grievances can stem from a range of problems, including, for example:

• A breakdown in relationships. Employees may have problems with a work colleague or management. There may be accusations of sexual harassment or bullying.

Forum of Private Business

Section 8 Employment

• Work-related problems, for example, complaints concerning the working environment, the tasks an employee is required to carry out or dissatisfaction with terms and conditions of the job. Employees may feel that they have been treated unfairly in terms of their appraisal, pay review, promotion, performance, sickness absences, attendance, discipline, downgrading or dismissal.

• Employees may feel that their employer has discriminated against them on the grounds of religion, race, gender, sexuality, age or disability. Your disciplinary process should follow the principles set out in the Acas Code of Practice on disciplinary and grievance procedures. Failing to follow the code could increase the employees’ compensation by 25% if it goes to a tribunal and you could also be fined 50% of the amount claimed. If as a result of implementing the discipline process, the dismissal of an employee or their abrupt resignation following a dispute, you receive an Employment Tribunal documents or a request from Acas to engage in mediation with a former employee contact the Forum’s member helpline immediately on 01565 626001.

8.7 Dismissal As an employer there may be times when you could have to dismiss an employee, you need to ensure that you are acting carefully, thoroughly and most importantly professional. A dismissal may be fair or unfair, depending on the reason for the dismissal and whether the employer acted ‘resonably’ in the circumstances. To dismiss an employee fairly, you must have a fair reason for doing so. The designated reasons are:

•

capability or qualifications

•

conduct

•

illegal or a contravention of a statutory duty

•

redundancy

•

some other substantial reason (SOSR) This is a very wide category and is used to cover virtually every other possible reason.

Dealing with potential disciplinary issues in a timely and effective manner can often nip bad behaviour in the bud and reassure other members of staff before things become a major issue. However if dealt with in the wrong way this can not only have a demotivating effect but also result in legal action. Do ensure if you have to resort to dismissing a member of staff that this is done fairly, this means that you have a fair reason for doing so. Common reasons can include but are not limited to capability, conduct, illegality or redundancy. Do remember that you don’t have to take employees with less than 24 months service through a full disciplinary process in order to be dismissed, but you should seek specialist advice to ensure that you are not in breach of employment law.

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Do remember that in most dismissal situations, employees are entitled to notice either under their contract of employment or to statutory notice depending on the length of service. Do remember should ensure that you pay an employee what they’re entitled to, including pay up to the date of termination of employment, pay for any unused accrued holidays, pay in lieu of notice and any other contractual benefits after going through the correct redundancy process. It is also worth noting that any redundancy process cannot include the first in last out option. Don’t feel pressured to give a reference to an employee who has had their employment terminated. There is no legal obligation to do so. If you do, you should ensure that it is true, accurate and fair and based on documentary evidence to avoid any potential legal action. Don’t refuse a request for written reasons for dismissal from an employee with two year’s continuous service as they have a right to written reasons within 14 days if requested. Disciplinary issues are one of the most common areas that businesses will face and ensuring you have the correct procedures in place from the start can avoid any problems later. These issues are complex and it’s essential that you act carefully and seek specialist advice before dismissing somebody. For further information call the Forum’s member helpline on 01565 626001

8.8 Redundancy Any employer may face a situation where they need to make redundancies. If an employer finds themselves in this situation, it is important that they follow the correct procedures to ensure that they comply with the law. See the redundancy flow chart on page.58. There has to be a genuine reason for redundancy because it is the employee’s job or function that is being made redundant, not the person. Generally, the reasons for redundancy may include:

• Restructuring or reorganisation • A need to reduce overheads • An increase in automation, so there is no longer any requirement to employ the number of employees. The redundancies will come from either across the whole workforce or from specific departments. The group of workers who have been declared at risk of redundancy are known as the ‘pool for selection’. Once the pool has been identified, it is necessary to apply selection criteria in order to select those who will be made redundant. This is usually in the form of a scoring process and will be used during the consultation period. The workforce should be issued with a copy of the selection criteria once they have been informed that redundancies are being considered. Individual consultation is necessary for all redundancy situations. Employers should speak to every employee who is facing redundancy and discuss with them the reasons why

Forum of Private Business

Section 8 Employment

redundancies are being made, and any potential alternatives to redundancy. Employers must also speak to employees who are not themselves facing redundancy but may be affected by the redundancies, for example, employees whose workload will change. Where fewer than 20 employees are to be made redundant, there is no fixed procedure to follow, but the consultation must still involve a genuine consideration of employees’ concerns and suggestions. Consultation periods are required to last for a specified period of time. Number of employees at risk

Minimum consultation period

0-19

14 days

20-99

30 days

100+

45 days

The purpose of the consultation is not to inform them they are at risk of redundancy, but to discuss and consult regarding the completed criteria format. This means speaking to the employee individually and giving them the opportunity to discuss the score sheet, whether it be to object, discuss or indeed correct the score. As part of the consultation process, you must consider the possibility of alternative employment. Vacancies may be identified in areas of the business, where the potential redundant employees do not currently work. All potential vacancies within a group should be discussed where appropriate. Once the consultation has taken place, you should hold a final meeting with each employee to let them know the final decision. There will be some discussion on whether the redundant employee is expected to work their notice, or whether they are to be paid in lieu (gardening leave). There will also be a discussion regarding redundancy pay. Possible payments an employee may be entitled to are:

• statutory redundancy payment • contractual redundancy payment • pay in lieu of notice • unused accrued holiday entitlement • final monies earned including bonuses and commission You should ensure that any redundant employee with over two years’ service working their notice is allowed reasonable time off to attend interviews. The purpose of redundancy is to make an organisation run more efficiently and it is easy to lose sight of the employees who are going to stay and make that a reality. Consider how you will communicate with them, what you will say and how you can make the message for them positive.

The Forum Compliance Guide 2017

Redundancy flow chart START

Does a redundancy situation (as defined) exist?

Dismissal cannot be by person reason of Create redundancy. specification

Decide the number of employees to be

Will more than 20 employees be a period of 90 days or less?

Consult with appropriate representatives of the employees concerned on the measures to be taken.

Create person specification

No duty to consult appropriate representatives of the employees concerned.

Notify Redundancy Payments Service and obtain a HR1 form.

Invite volunteers.

Does an established selection procedure exist?

Create person specification Establish objective criteria for selection.

Apply selection procedure

Issue letter in accordance with the Acas code. Consult with individuals redundancies, reasons for selection and availability of alternative employment.

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Hold step two meeting. Issue dismissal Create person notices, advisingspecification employee of right of appeal. Hold appeal meeting if this is requested.

Section 8 Employment

8.9 Absence The absence of staff from work causes obvious problems of productivity, this can be particularly challenging in a small business, the smaller the company the bigger the effect. According to the Chartered Institute of Personnel Development’s (CIPD’s) Absence Management Survey 2015 (http://www.cipd.co.uk/hr-resources/survey-reports/absencemanagement-2015.aspx) absence levels amounted to an average of 6.9 days per employee per year. The average cost of absence is estimated at £554 per employee per year. In order to manage absence in your business and in order that staff know what is expected of them regarding absence and attendance at work, it is advisable to have a written absence policy. By law, you must set out information about your sickness policy and details about sick pay in a written statement of employment particulars and provide a copy of this to employees who have worked for you for at least one month. Your business’ absence policy should include the following information:

• Details of your business’ sick pay scheme, including any occupational sick pay arrangements. • A reminder of the employee’s responsibility to maintain good attendance in accordance with their contract of employment.

• Instructions as to how staff should notify you of their absence, for example, who they should contact by when and how (i.e phone, email, text)

• Confirmation of your business’ support for employees with genuine reasons for absence, for example, by providing sick leave and pay for staff unable to come to work because of illness or injury, special leave for other absences such as dental or GP appointments, time off to attend to emergencies, or compassionate leave to attend funerals.

• Details of how staff should provide evidence of their incapacity, for example, by providing a Statement of Fitness for Work or ‘fit note’ from their GP. For an absence of seven days or fewer, an employee is not required to provide a medical certificate, however, they should complete a selfcertification form upon their return. For absence 8 days or more, a note from the GP is required.

• An explanation of how absences relating to pregnancy and disability will be recorded and treated. • An explanation of how and when ‘return to work’ interviews and ‘absence review’ meetings will take place and the purpose of these discussions.

• An explanation that you may refer to a GP or another health professional where appropriate, to help identify the nature of an employee’s illness and advise on the best way to improve their health and wellbeing. An employee is not legally entitled to receive payment for periods of unauthorised absence or lateness. However, for sickness absence, an employee is entitled by law to receive Statutory Sick Pay (SSP). It is entirely up to you If you wish to provide company sick pay over and above the level of SSP. Calculate an employee’s sick pay – start here Refer to our ‘Employment guide’ for a more detailed guide to absence.

The Forum Compliance Guide 2017

8.10 Family Friendly Rights Paternity law provides protection for employees who are expecting a child. Employees have important statutory rights in relation to certain family situations, which aim to strike a balance between their work and home commitments. Parental rights an employer needs to be prepared for are:

• Maternity leave and pay https://www.gov.uk/maternity-pay-leave • Paternity leave and pay https://www.gov.uk/paternity-pay-leave • Adoption leave and Pay https://www.gov.uk/adoption-pay-leave • Shared parental leave https://www.gov.uk/shared-parental-leave-and-pay • Parental leave https://www.gov.uk/parental-leave

For detailed advice take a look at the links above and also refer to the ‘Family-Friendly rights’ section of the employment guide. Call the Forum’s member helpline on 01565 626001

8.11 Flexible Working Request Any employee with at least 26 weeks’ continuous service can make a flexible working request if certain criteria are met. If granted, such requests involve a permanent change to the employee’s terms and conditions, e.g. by allowing him or her to work particular hours or to work from home. They are therefore often made by employees with caring responsibilities, although this is no longer a prerequisite. Requests for flexible working for child care must be considered equally with a request for time off to go fishing or working from home. If you receive a request, you have three months to consider and respond to the employee and must do so in a reasonable manner. An eligible employee may only make one flexible working request within any 12 month period. You are not obliged to agree to a request if a statutory reason for rejection applies, e.g. cost, impact on performance, or inability to reorganise work amongst other staff.

Forum of Private Business

Section 8 Employment

8.12 Auto-enrolment Auto-enrolment was introduced by the UK Government in October 2012 Under the Pensions Act 2008, to ensure that employees make a provision for their retirement above and beyond the state pension. Under the system, employees must contribute to a qualifying workplace pension scheme, as must employers. The Government also contributes by means of tax relief. Auto-enrolment was first introduced in large companies and is being rolled out to other businesses at various ‘staging dates’. Automatic Enrolment applies to all employers who have at least one member of staff and by 2018 all small and micro businesses must have signed up. Employees who are already in a qualifying workplace pension scheme do not need to join a new one and self-employed people are not affected by the system. The staging date that applies to your business depends on the number of employees in your PAYE scheme and your PAYE reference number as of 1st April 2012. You can find your staging date by entering your PAYE reference number into the Pension Regulator’s Staging Date Calculator, which is available at http://www.thepensionsregulator.gov.uk/employers/stagingdate.aspx For employees to be eligible to join the scheme they must be:

• between 22 and 74 years of age • earn over £10,000 per year These employees are known as ‘Eligible jobholders’. You must auto-enrol them into the scheme, however, they do have the option to opt out if they wish. Employees aged 16-74 earning over £5,876 can join the scheme, but they must request to join. They will not be automatically enrolled. These employees are known as ‘Non-eligible jobholders’. The Government has set minimum contributions for both employer and employee. These are set to rise over the next few years, and by 2018 there will be a minimum contribution of 8%. Year

Employer minimum Contribution

Total minimum Contribution

Employer’s staging date to 5th April 2018

2% (including 1%Employee Contribution)

6th April 2018 to 5th April 2019

5% (including 1%Employee Contribution)

6th April 2019 onwards

8% (including 1%Employee Contribution)

You and your employee may decide to pay more than the minimum shown above. What matters is that your total contribution meets, or exceeds, the stated minimum. The Pensions Regulator has all the advice and information you will need in order to set up your workplace pensions scheme. http://www.thepensionsregulator.gov.uk/en/employers You can also read our guide to pensions

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Notes

Forum of Private Business

Section 9 Insurance

“Our comprehensive range of insurance and risk management solutions are designed to protect small business employers and help them survive traumatic events. 20% of SME’s have not planned for any disasters. ” Katie Handley, Forum Business Development Executive

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Forum of Private Business

Section 9 Insurance

Section 9 Insurance If you have employees you must have a certificate of employers’ liability insurance (EL), this should be in place to a value of not less than £5 million, most policies automatically provide cover of £10 million. You must implement the procedures to ensure that:

• You are aware if you qualify for an exemption – refer to http://www.hse.gov.uk/pubns/hse40.pdf • EL insurance is obtained (to a value of not less than £5 million) • A copy of your current certificate of EL insurance is displayed at each site of premises. Your employees must have access to it and it should be made available electronically if required

• You are able to retain copies of certificates that have expired Your company may also require other insurances such as:

• Public Liability • Building and contents • Professional indemnity/liability • Business interruption • Key person • Vehicles • Contractors all risk Usually, insurance companies include these as part of a package of insurance for business.

A wide range of business insurance cover is automatically included in the Forum’s membership. Designed to protect small employers and help you to survive traumatic events. Call the Forum’s member helpline for more information on 01565 626001

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Notes

Forum of Private Business

Section 10

Health & Safety

“Failure to comply with the correct Health and Safety Regulations can result in costly fines for employers and workplace owners.”

Notes

Forum of Private Business

Section 10 Health & Safety

Section 10 Health & Safety There are many reasons why companies should establish an effective Health and Safety management system. The first reason should always be to ensure that the risks are sensibly and proportionately controlled so as to prevent accidents and injuries. Without a Health and Safety Management system in place, the likelihood of a costly accident increases dramatically. A system should be designed to prevent accidents, to ensure legal compliance and to save costs to enable a business to be more efficient. Your health and safety management system must be fit for your operations and must be established and run by people who are competent to do so. You must appoint a competent and responsible person to manage the day-to-day health and safety management system, this may be a number of people depending on the size and nature of your business. Every employer must comply with health and safety regulations which are intended to protect people such as employees, customers or members of the public. The Health and Safety at Work etc. Act 1974 was established to control the number of fatalities arising out of work. Businesses failing to comply with the legislation will face penalties averaging £37,297* (*HSE 2014/15) The key legislation you need to know about includes (though is not limited to):

• Workplace (Health, Safety, Welfare) Regulations 1992 • Control of Asbestos Regulations 2012 • Manual Handling Regulations 1992 • Work at Height Regulations 2005 • Provision and use of Work Equipment Regulations 1998 • Control of Substances Hazardous to Health Regulations (COSHH) 2002 Health and safety covers such a vast area of legislation and the Forum specialises in providing Health & Safety advice. We have a Health and Safety Guide to help make you aware of the many requirements for compliance with Health and safety law as well as all of the other motivators that businesses need to take account of when allocating resources to the management of Health and Safety. The guide is to be used as a first step to establishing a successful management system.

The Forum Compliance Guide 2017

10.1 Fire Standards All business premises must comply with fire safety legislation. Employers must undertake a Fire Risk Assessment (FRA) and keep this up to date. Once you have completed the assessment and identified any risks, you must ensure that adequate and appropriate fire safety measures are put in place. Employees must be informed of the risks you have identified and the safety measures you have put in place. They must be informed of the plan for an emergency and be provided with fire safety instructions and training. These measures will help to minimise the risk of injury or loss of life. See our template FRA form at the end of this section, on page 73 For more information visit http://www.hse.gov.uk/toolbox/fire.htm England & Wales: https://www.gov.uk/workplace-fire-safety-your-responsibilities Scotland: http://www.gov.scot/Topics/Justice/policies/police-fire-rescue/fire/FireLaw

10.2 Risk Assessments Risk assessments are required for all aspects of your operations. You must identify hazards and assess the level of risk they present to employees and others. The number of Risk Assessments will depend on your operations and degree of risk presented. Risk assessments required by law are Fire, Manual Handling, Display Screen Equipment, Control of Substances Hazardous to Health (COSHH), Confined Spaces, Young Persons, new/expectant mothers, Personal Protective Equipment (PPE), Vibration and Noise. For more information go to http://www.hse.gov.uk/risk/

10.3 Waste Management Waste Management is the name used for the collection, transportation, disposal/recycling and monitoring of waste. The waste has to be managed to avoid its adverse effect on human health and environment. As a small business you must:

• keep waste to a minimum by doing everything you reasonably can to prevent, reuse, recycle or recover waste (in that order)

• sort and store waste safely and securely • complete a waste transfer note for each load of waste that leaves your premises • check if your waste carrier is registered to dispose of waste • not allow the waste carrier to dispose of your waste illegally • You have extra responsibilities if you’re dealing with hazardous waste. Useful website https://www.gov.uk/managing-your-waste-an-overview/your-responsibilities

Forum of Private Business

Section 10 Health & Safety

10.4 Food Safety Act 1990 The Food Safety Act 1990 applies to any business that is involved in the production, processing, distribution, transport, import, export, presenting, labelling, storage or sale of food. This includes self-employed people, non-profit organisations, farmers, growers, caterers and retailers. However, farms that only rear animals and sell them live are exempt from the requirements of the Act. Useful website https://www.food.gov.uk/business-industry/guidancenotes/hygguid/fsactguide

10.5 REACH If you’re using, making, selling or importing chemicals in the EU, you need to follow REACH (Registration, Evaluation, Authorisation and restriction of Chemicals) regulations. The regulations are there to protect human health and the environment from the use of chemicals, by making the manufacturers and imports manage the risks. It is a very complex piece of legislation and expert advice should be sought. Useful website http://www.hse.gov.uk/reach/ https://echa.europa.eu/support/guidance http://ec.europa. eu/environment/chemicals/reach/reach_en.htm

10.6 Personal Protective Equipment (PPE) Making the workplace safe includes providing instructions, procedures, training and supervision to encourage people to work safely and responsibly. PPE is equipment that will protect the user against health or safety risks at work. It can include items such as safety helmets, gloves, eye protection, high-visibility clothing, safety footwear and safety harnesses. It also includes respiratory protective equipment (RPE). The Personal Protective Equipment at Work Regulations 1992 (the PPE Regulations) applies in England, Wales and Scotland. A similar provision is made in Northern Ireland under the Personal Protective Equipment at Work Regulations (Northern Ireland) 1993. The PPE Regulations define under what circumstances PPE must be provided to employees. Useful websites https://www.gov.uk/government/publications/personal-protective-equipmentregulations-2002-guidelines-on-the-appointment-of-uk-approved-bodies http://www.hse.gov.uk/toolbox/ppe.htm

10.7 Control of Substances Hazardous to Health (COSHH) Under the Control of Substances Hazardous to Health Regulations 2002 (COSHH), employers have a duty to prevent or control the exposure of employees to any substances that are hazardous to their health. Employers are also required to carry out an assessment of the risks

The Forum Compliance Guide 2017

to employees involved in working with such substances. The COSHH Regulations apply to the self-employed in the same way that they apply to employers. In Northern Ireland, hazardous substances are covered by the Control of Substances Hazardous to Health Regulations (Northern Ireland) 2003 (COSHH), which impose broadly similar requirements. To comply with the COSHH regulations you must:

• Carry out a COSHH assessment • Control exposure to hazardous substances • Maintain equipment controlling hazardous substances • Monitor exposure to hazardous substances • Carry out health surveillance on employees • Provide information and training to employees If you do not comply with COSHH regulations the HSE may bring enforcement actions against business proprietors or directors and their employees may also bring civil claims against them. This may result in fines and significant disruption to the business and its reputation in the market. Useful website http://www.hse.gov.uk/coshh/

10.8 First Aid Suitable provision must be made for first aid within your company. As there are no strict requirements for the level of provision, you will need to undertake a specific assessment of your own first aid needs to determine the level and extent of the provision required. Under the Management of Health and Safety at Work Regulations 1999, every employer is required to carry out a risk assessment of their workplace. This will help to determine what level of first-aid provision is needed. The minimum that every employer should provide is a suitably stocked firstaid box and an ‘appointed person’ to take charge of first-aid arrangements. A notice should be posted in the workplace to indicate the location of the first aid box and the name of the appointed person and any trained first aiders. As part of the Health and Safety at Work etc. Act 1974, a business or other organisation that employs more than five people must have a written statement of its general policy on health and safety at work. In addition, those with 10 or more employees must have an accident book, which should be kept for at least three years from the date of the last entry. Employers must, by law, report certain accidents and illnesses at work to the HSE. Go to http://www.hse.gov.uk/riddor/ for information on the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 2013 (RIDDOR). It is also the employer’s responsibility to arrange necessary contacts with external services regarding first aid, emergency medical care and rescue work. If you are self-employed, you must ensure you have adequate facilities to provide first aid to yourself whilst you are working. First aid is covered by the Health and Safety (First-Aid) Regulations 1981. http://www.hse.gov.uk/ firstaid/legislation.htm

Forum of Private Business

Section 10 Health & Safety

Assessment -Fire risk form Print out and complete this form for every hazard you identify.

Area location: Identify the hazard

Date: Rank

Who can be harmed? Employees Client staff Contractors Visitors General public Other(s)

Identify the consequences in detail (that is, what type of harm or loss can occur)

List the existing control measures

Actions required (list any additional actions that may be required to further reduce risks)

Overall risk presented (after control measures are implemented)

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Notes

Forum of Private Business

Section 11 Trading

“Forum members spend 15% less time dealing with employment law issues and use our team of advisors for support and advice via the helpline.” Chelsey Hargreaves, Forum Business Development Executive

Notes

Forum of Private Business

Section 11 Trading

Section 11 Trading 11.1 Trading Standards Trading Standards are a local authority department. They enforce law in a number of areas:

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Age restricted products Agriculture Animal health and welfare Fair trading, which includes pricing, description of goods and services, terms and conditions Food standards and safety Intellectual property Product safety Weights and measures

They can carry out out routine inspections but can also also respond to complaints made by the public. Refusing to allow them entry is a criminal offence. They have the power to ask you to produce documents, sieze and detain goods. Useful websites https://www.gov.uk/find-local-trading-standards-office https://www.tradingstandards.uk/consumers/support-advice

11.2 Trading abroad If you have a successful UK business you may begin to look into opportunities abroad. It may be to import new products or raw materials, find new export markets or manufacture some or all of your products. You must ensure you research all of the legalities specific to your industry. The below websites have lots of support and advice if you are considering trading abroad. Useful websites http://smallbusiness.co.uk/exporting-goods-abroad-a-guide-for-small-businesses-2419847 http://exportbritain.org.uk/ http://www.britishchambers.org.uk/business/international-trade https://www.gov.uk/government/collections/overseas-business-risk https://www.gov.uk/government/organisations/department-for-international-trade

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11.3 Consumer Credit Act 2006 If you lend money to consumers, offer goods or service on credit or engage in ancillary credit activities you must be licensed by the Financial Conduct Authority(FCA) For more information visit https://www.the-fca.org.uk/firms/consumer-credit

11.4 Consumer Contract Regulations 2013 (previously Distance Selling Act) If you sell to consumers at a distance without face-to-face contact, i.e mail order, internet, email- you must comply with the Consumer Contracts Regulations. The regulations include:

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Pre-contract information for distance and off-premises contracts

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14 day cancellation period

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A model cancellation form for customers to use

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You are obliged to refund a customers money if they cancel within 14 days

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Online traders must make the total price clear

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You cannot use tock boxes as acceptance of a financial or other obligation

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Prohibition on charging more than standard rate phone calls.

Useful website https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/429300/ bis-13-1368-consumer-contracts-information-cancellation-and-additional-paymentsregulations-guidance.pdf https://www.gov.uk/online-and-distance-selling-for-businesses/overview http://www.lawdonut.co.uk/law/sales-and-marketing/distance-and-online-selling/ distance-selling

11.5 Consumer Rights Act 2015 (previously Goods and Service License) The Consumer Rights Act requires that goods and services, including digital content, should be provided to consumers of satisfactory quality, fit for purpose and as described. If a trader fails to meet their obligations relating to contracts for the supply of goods, digital content and services under the Act and does not provide the consumer with the appropriate remedies they can be investigated by an enforcer and taken to court. Useful website https://www.gov.uk/government/publications/consumer-rights-act-2015/consumerrights-act-2015

Forum of Private Business

Section 11 Trading

11.6 Competition Law Competition law is designed to protect businesses and consumers from anti-competitive behaviour. All businesses must comply with competition law and there can be serious consequences for businesses and individuals, including directors, for non-compliance. Useful website https://www.gov.uk/government/collections/competition-and-consumer-lawcompliance-guidance-for-businesses https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/306899/ CMA19.pdf https://www.gov.uk/government/collections/cma-ca98-and-cartels-guidance

11.7 Warehousekeepers and Owners of Warehoused Goods Regulations (WOWGR) If you want to store or trade in Duty suspended Beers & Spirits in a UK bonded warehouse you are required to be WOWGR registered with HMRC. Without a valid WOWGR you will only be able to store Wine, (Duty Suspended) and other goods will have to have Duty Paid status. You can import Duty Suspended Beers & Spirits and convert them to Duty Paid Status for storage by paying the required UK excise duty on arrival at into a UK warehouse, under the 72-hour rule, failure to comply will result in seizure and forfeiture of the goods to HMRC. WOWGR is only available to UK registered companies, non-UK registered companies will require a UK company with a valid WOWGR to act as their UK Duty representative. Useful website https://www.gov.uk/government/publications/excise-warehousing-application-to-be-anowner-of-duty-suspended-goods-held-in-excise-warehouses-ex60

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Notes

Forum of Private Business

Section 12 Marketing & PR

“Do want to have an affordable PR solution that links your business with journalists and the media? Talk to Journolink journolink.com an approved partner of the Forum of Private Business” Jo Thornber, Forum Marketing Executive

Notes

Forum of Private Business

Section 12 Marketing & PR

Section 12 Marketing & PR 12.1 Marketing One of the most important factors that will contribute towards the long-term sustainable success of any business venture is defining and following a clear marketing strategy. A small business owner with the vision to create a dynamic, customer-focused marketing strategy - and the discipline to carry it out - will have a real opportunity to do something special with their business. This can help to create a ‘buzz’ that will set them apart from their competitors. Being smart with marketing ensures the success of your business by attracting more customers and retains them in the long term. Having a marketing strategy is different to having a marketing plan. A marketing strategy involves choosing realistic, measurable and ambitious marketing goals that a business can achieve on a sustainable basis. A marketing plan, on the other hand, will include the tactics and actions that are needed to achieve the overall strategic goals and a timetable for their implementation. In other words, the plan will detail what to do to make the strategy happen, and each marketing tactic used should be 100% focused on reaching and surpassing these strategic marketing goals. For more information read our guide to ‘Marketing your small business’. Useful websites http://startups.co.uk/guide-to-building-a-marketing-strategy/ http://startups.co.uk/low-cost-marketing-strategy/ http://www.smarta.com/advice/sales-and-marketing/ advertising-and-marketing/how-to-develop-a-marketingstrategy/ http://www.marketingdonut.co.uk/marketing/marketingstrategy/overview

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12.2 Build a Website A website is the shop window to your business. Whether it is to be used to sell your product or just for information, it is the first place customers will go to not just see your product but to also establish your credibility. Many businesses also fall into the trap of building a website and then never updating it. But your business is not static, it is changing all the time and your website needs to reflect this. New, interesting and relevant content will have visitors and search engines coming back to your site again and again. But where do you start if you aren’t au fait with web technology? There are a number of affordable website builders you can use yourself to create the website, once your business is established and successful you may wish to increase your budget and use the services of an agency to create a bespoke site. Useful links Take a read through our Briefing a Web Designer mini guide. https://smallbiztrends.com/2016/05/free-website-builders.html

12.3 PR Every organisation, no matter how large or small, ultimately depends on its reputation for survival and success. PR can be used to build rapport with employees, customers, investors, opinion leaders, voters, but quite often it’s the general public who are the intended end consumer. Most businesses, however small, could usually benefit from PR, but often just can’t afford to employ communications professionals, especially as this could be more expensive than direct advertising. So it’s usually a case of making do without or appointing a non-qualified member of staff to take responsibility. Those that can afford it will sometimes employ a PR agency, usually at a high cost, involving contracts, and often retainer fees. This can be off-putting for many SMEs looking to minimise costs in the current economic climate and who perhaps only have a one-off story to tell. The Forum actually helps you do your PR by providing a platform and distribution to relevant journalists, broadcasters and bloggers. This is through our exclusive partnership with Journolink. They not only help you get your news release posted but also put you in a directory for journalists to find your business for requests and comments.

Forum of Private Business

Section 12 Marketing & PR

12.4 Social Media Social media is a great way to reach your target market, for free!. You can deliver your message, promote your product/service and communicate with your customers to discover what they love or indeed dislike about your brand. If used properly it can make a huge difference. 58% of small businesses use social media to support their marketing.* You don’t need to sign up to every social media platform, not every platform will be appropriate for your business and if you did, you would not have the time to maintain them all. Take some time to understand the different platforms available and determine which is going to be the most effective for you and your business. For building relationships Facebook - Microblogging, photos and video Twitter - Message ‘tweets’ of 140 characters only, conversations driven by hashtags, images and video Linkedin - Store CV, share business ideas and business networking For sharing content Pinterest - Virtual Noticeboard to pin interesting images and articles YouTube - Videos Instagram - Images and videos Useful Websites http://www.greatbusiness.gov.uk/engaging-through-social-media/ https://sproutsocial.com/insights/social-media-channels/ *Sage 2015

Disclaimer: This guide is provided for guidance only and does not constitute legal advice. We advise any employer needing advice to call the Forum’s Member helpline on 01565 626001.

The Forum Compliance Guide 2017

Our expertise is your expertise For more information on how we can help your business with simply contact our helpline team on 01565 626001, visit our website www.fpb.org or email us marketing@fpb.org

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