Data Protection: Have You Registered with the Information Commissioner?

Registration with the Information Commissioner is mandatory if you control data about individuals which is not for the purpose of staff administration; business accounts and records; or marketing activities for your own business. If you do these things for someone else, or if you use personal data for any other purpose, and the records are held electronically, you must be registered to comply with UK law.

For example, if your business has a social club, and you keep computer records of members, you are not exempt from having to register. If you are a marketing consultant, and hold personal records of your clients’ customers or targets, you are not exempt either. If you are not sure whether you are exempt, check out the Data Protection Basics page at http://www.ico.gov.uk/.

When you register, you are required to notify the Commissioner of the type of information you hold and how you use it. After this you must notify of any changes either to your own details or how you are processing data. You must keep your data accurate and up-to-date for the duration of time that you need it, keeping it no longer than is necessary.

You also have a responsibility for the security of the data you hold, and new penalties have recently been introduced by the Information Commissioner’s Office that gives the Commissioner power to impose a fine of up to half a million pounds for serious breaches of the Data Protection Act.

Yes, that’s £500,000!

This maximum amount will only be imposed in very substantial cases which might be damaging or distressing for the individuals concerned, and where the data controller acted unlawfully or failed to take reasonable steps to stop it happening. But even a fraction of that penalty could have serious implications for your business.

Be warned. The onus is on you to ensure you remain compliant with the Data Protection Act 1998.

Lynn Watson is the Director of Office Assistants, a company certified by the Institute of Certified Bookkeepers. They offer small to medium businesses of all types the chance to cherry pick from a flexible range of services including bookkeeping; VAT; Payroll; CIS returns and general office services. The company has 20 years experience and pure expertise in streamlining systems and making substantial savings for all types of Essex and London businesses from sole traders upwards. For more information visit http://www.officeassistants.org/

Employed or Self-Employed: Guidance When Recruiting

The UK arm of the massively successful organisation WeightWatchers International (WW) was recently required to pay nearly £24 million to HMRC. Why? Because it had deemed its 1700 or so class leaders self employed, while the Revenue disagreed and was eventually backed up by a tax tribunal.

WW were convinced their contracts with these people were watertight, but the tribunal looked beyond the clear and unambiguous wording of the agreements. Its findings agreed with HMRC that they had been treated like employees through the rules they had to comply with.

These covered ‘how much they could weigh, what they must wear, the products they could sell at meetings (only WW ones) and the holidays they could take…’ They couldn’t sub-contract and had to run their classes themselves; ‘not even another WW leader could attend on their behalf.’

So WW had to fork out employers’ contributions for NI plus all PAYE taxes due since 2001, presumably with penalty payments as well.

There is of course a moral to this story. If you use, or are contemplating using self-employed people in your business, they must not be treated in the same way you would treat an employee.

People who are self-employed are contracted to ensure completion of a service to an agreed standard, not necessarily to complete it themselves. They must agree to the work for a fixed fee or a fixed price. They should present invoices for the work as agreed in advance, those invoices to be paid according to agreed terms.

If you use someone self-employed over a lengthy period, take care that the relationship between you doesn’t change to resemble your relationship with your employees. If you wish to terminate an agreement with a self-employed person, never use the term ‘dismissal’ which has employment connotations.

Check with your bookkeeper or accountant if you have any concerns about this.

Lynn Watson is the Director of Office Assistants, a company certified by the Institute of Certified Bookkeepers. They offer small to medium businesses of all types the chance to cherry pick from a flexible range of services including bookkeeping; VAT; Payroll; CIS returns and general office services. The company has 20 years experience and pure expertise in streamlining systems and making substantial savings for all types of Essex and London businesses from sole traders upwards. For more information visit http://www.officeassistants.org/

Know the Rules on VAT Filing

From this April, if at or since 31 December 2009, your business turnover for the previous 12 months was more than £100,000, or you are newly registering for VAT, you have to file your returns online and pay electronically. HMRC is phasing out paper returns and this will eventually apply to all businesses, so even if you’ve already registered but don’t reach the £100K threshold, it is a good idea to go electronic if you can. Paying via an online direct debit actually gives you more time to pay than making payments by any other method.

The standard VAT periods are quarterly, with returns and payments due by the end of the following month. If you file online, when you have a VAT payment to make, you have an extra seven days to file your return. If your payment choice is by direct debit, HMRC will take your amount three days later, giving you the possibility of an extra 10 days for the amount to be earning interest for you.

Remember though, that if you are making a nil return or require a repayment, you don’t have the extra seven days to file. HMRC are not likely to make the £100 or more surcharge in such circumstances, but you will probably receive a warning notice and lose brownie points.

Other VAT schemes are available to small businesses. Under the Cash Accounting VAT Scheme, you only have to report actual payments from customers, instead of the amounts on the invoices you send out. Under the Annual Accounting Scheme, you have to estimate the amount of VAT you will owe for the year and make regular prepayments. At the end of your accounting year, you must file an accurate return and pay the balance due or claim a repayment at that time.

Whatever arrangement you have with HMRC, make sure you always file your returns and make your payments on time, so you avoid paying any surcharges and interest.

Lynn Watson is the Director of Office Assistants, a company certified by the Institute of Certified Bookkeepers. They offer small to medium businesses of all types the chance to cherry pick from a flexible range of services including bookkeeping; VAT; Payroll; CIS returns and general office services. The company has 20 years experience and pure expertise in streamlining systems and making substantial savings for all types of Essex and London businesses from sole traders upwards. For more information visit http://www.officeassistants.org/