How Flexible Working Makes Businesses Attractive to Employees

When you are considering the type of people you want to join your business, and how to attract them, you would do well to look at your working practices, especially if you are competing for a small pool of good people.

How to Get them on Board

Naturally you demonstrate your own passion for what you are doing and hope to motivate the same in them. Alongside this, and the attractive pay package, sits the way you operate and will expect them to perform.

Recent research by Regus, the major international player in business services, indicates the need to offer flexible working conditions to attract and retain the best personnel. Of their survey of 3,000 professionals, 90% said that if everything else about two positions was equal, they would go for the one that had the most flexible working options.

Richard Morris, Chief Executive of Regus UK, said that these days flexibility is not looked on as a perk – it is seen as more of a right. It has become “a key differentiator for talented individuals”.

The Retention Factor

Almost a third of respondents in the survey also said they would not have left their previous position when they did if working hours and conditions had been more flexible. Clearly, if you value your people, it would pay to make their workplace setup and hours as flexible as possible. Entrepreneurs need to have hard working people they can trust to remain in place or progress through the business. You don’t need the expense and hassle of the recruitment process every year.

According to Richard Morris, “A flexible role is one where the individual has more control over where and when they are productive. Managers must get better at measuring on results rather than on time spent at a specified desk … There is also the current business climate to consider. The economic uncertainty requires business to be more agile and nimble so operating with a fluid and flexible workforce, using available workspace, makes real commercial sense…”

If you think it’s time to make changes to accommodate all this, you could discuss it with your local bookkeepers. They will most likely have experienced a variety of ways in which companies have made flexible conditions work for them, so they can warn you of pitfalls and advise on how to avoid or negotiate them.

How to Deal with Bank Holidays and Part Time Workers

Under the Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000, it is illegal to treat any workers differently from their colleagues, and this applies as much to how leave is allowed and paid as to anything else. All employees must have at least the minimum annual leave entitlement. For those working a five day week or more, this is 28 days a year. Those working fewer days or hours must be given the appropriate proportion of this amount.

What About Bank Holidays?

You can choose to include these within this annual leave entitlement or give them additionally. If you do the former, everything is straightforward. The employee is paid for a normal week or month. It makes no difference whether or not they normally work on the day of the week on which the bank holiday falls. But suppose you are like the majority of employers who give additional leave for bank holidays; how do you calculate the payment they are due?

Calculating How Much you Should Pay

The way to do it is to work out the number of hours you need to pay them for, much as you calculate the amount annual leave they should have. If your working week is 35 hours, the hours of a normal years’ eight Bank Holidays is eight times the hours of a working day, which equals 56. For a part timer working 3 full days (21 hours), the hours they should be paid for bank holidays are calculated in this way:

21 divided by 35 x 56 = 33.6

Divide this total by eight and you get 4.2. If the rate of pay is £10 an hour the payment for a bank holiday day is £42 gross instead of £70 for a full time worker on the same hourly rate. To ensure full parity with full time workers, you would be wise to pay this amount whether or not the worker would otherwise have been at work on the bank holiday.

Keeping Within the Law

While human resources personnel should have no problem with these calculations, entrepreneurs who have a myriad of details to cope with may find it confusing. Getting help from your local bookkeepers could ensure you stay within the law and keep your staff happy and loyal.

New Tax Rules Affecting Company Distributions

In previous years it has been financially advantageous for business owners and directors to take a small salary during the year, and take a lump sum dividend at its end. This is because the rates of dividend tax have been much less than the rates of income tax. From 6 April 2016, however, this changed and dividend tax has been raised.

The first £5,000 is tax free, at zero rate. After that the basic rate amount is taxed at 7.5%, but the higher rate tax amount is 32.5% and for the additional rate it is 38.1%. So there is now much less advantage in taking high dividends instead of salary.

Government Concerns About Taking Capital on Winding up

Capital gains tax is also much less than income tax and now is less than both income and dividend tax. The maximum is 28% but it can be as little as 10% if an individual is eligible for entrepreneurs’ relief.

It is therefore tempting to take as much as possible as capital, which you might be able to do on winding up a company. But the government is wise to this and has set up new rules designed to discourage it. In certain circumstances they will tax such a distribution as income tax.

What Are Those Circumstances?

Firstly, the rule will apply if you are classed as a closed company, ie. one which only has up to five shareholders, or where the directors have full control of the company. Secondly, it will apply if a shareholder is paid capital from surplus reserves following a winding up, but they are involved with a new company set up for the same purpose within two years. When this is discovered the individual will be billed for extra tax, probably plus penalties.

The government takes a dim view of companies dissolved with new ones set up just to avoid higher rates of tax. They will always charge income tax on capital extracted in such circumstances.

What About Deliberately Retained Profits?

The practice of retaining profits instead of issuing dividends, so that they can be taken later as capital on winding up, has also been nipped in the bud. In future it will be penalised so you need to have a good reason for retaining profits.

Beware any tax adviser who recommends these dodgy tax avoidance schemes. Your local bookkeepers can assist you to stay within the law. They will also help you to document any legitimate reasons for retaining profits and to keep adequate records in case there are queries from HMRC. 

What you Need to Know About the New Confirmation Statement

If you own or are with a company that normally submits an annual return to Companies House, since 30 June 2016, you can no longer do this. Instead you must file a Confirmation Statement no later than 14 days after the anniversary of your last review date. This grace period is reduced from the 28 days previously allowed for the annual return. If you set up a new company, the first Confirmation Statement filing will be due one year after the date of incorporation, together with your first People with Significant Control (PSC) Register.

Failure to comply could mean prosecution for yourself and any other directors or officers of the business as well as the company itself. Late filing can carry severe financial penalties.

How to Submit

The Confirmation Statement is filed on form CS01 which consists of 62 pages, but it will only be necessary to complete it all the first time. The pages cover the company details; the date the confirmation is due, the business activities; the statement of capital held; the trading status of its shares and shareholder information; and details about PSCs. Confirming all this information assists Companies House to keep the public register up to date.

The Confirmation Statement is to be filed each year, following the due date, with a payment that is currently £13 for online filing or £40 if you send it by post. You can send in changes as they occur during the year without any additional payment. When the confirmation date comes round again, you need to check whether any further changes need to be made.

What to Check

These changes might be to:

• Company directors – any new appointments or terminations or changes in personal details
• The Company Secretary or registered office
• Shareholder information
• The SIC code or changes to the business activities
• Information in the PSC register
• Previously reported statement of capital
• Where the statutory books are kept 

This second and future statements will be made on a 2 page document that confirms or amends these details. It’s not a good idea to file early, because this will adjust the next due date to 12 months from this filing.

After the first Confirmation Statement, this should be a simple chore, but it must not be forgotten. Your local bookkeepers will be happy to remind you to get your filing done at the right time and to assist with all the submissions.

All you Need to Know About Secondments

Have you ever thought about taking on a secondee from another business? A secondment can be particularly useful when there is a need for temporary help, perhaps to get you through a particularly busy period or to cover another staff member’s maternity or parental leave, or long term sickness. Would it be a good idea to second one of your staff members elsewhere to help someone out, or to acquire skills that would be useful in your own business?

Why Second Someone?

These are all good reasons for secondments, but for you there could be other advantages as well. If you’d like to get a closer business relationship with the other organisation, offering a secondee could be a good start. For your personnel, it might be a really good career move that will enhance their CVs, so it could be a great way to reward them for loyalty and hard work.

Perhaps a member of staff has gone a bit stale and is thinking of moving on; you don’t want to lose them in the long-term, so hope that a secondment elsewhere could freshen up their working day. They might come back full of new ideas and enthusiastic to make them work.

If you have been going through a bad patch and think you might have to make one or two members of staff redundant, you could send them on a secondment for a time. Things could be better by the end of it. You will still have the responsibility to pay their salary, but will recover this and more from the companies that receive them.

Why Take on a Secondee?

It can be a great way to avoid all the hassle and cost of recruiting someone new. Sometimes you just need an extra pair of hands for a while. Taking on a secondee with skills not present in your team is another advantage, especially if he or she can pass those skills on while they are with you.

What are the Downsides?

Of course there are, as always, some pitfalls to avoid. The first may be concerns about confidentiality on both sides, so measures must be taken to avoid the passing on of sensitive business information. This can be solved with relevant clauses written into an agreement between all parties.

Another thing that might make you anxious if you let someone take up a secondment is that they might not want to return, but be taken on by the other company. Again, a well thought out and carefully written secondment agreement can restrict employment of the secondee by the host company for a period of time once the secondment comes to an end.

If you are still not sure about all this, your local bookkeepers may have experience of what is needed in secondment agreements, and be happy to discuss it with you. They might also be able to introduce you to professionals who could help if you feel this is needed. The Chartered Institute of Personnel and Development also offers fact sheets aboutsecondments on its website.

Common Misconceptions About Claiming VAT Back

When you are completing your VAT return and claiming back VAT you have paid on purchases, it should be a simple job that is easily completed. But it is also easy to get things wrong without even knowing. Some of the rules are complicated and unfortunately, ignorance is no defence if HMRC pick up your mistakes. They can, and will, impose heavy penalties.

Rules not Widely Known

Did you reclaim the VAT on your company car when you bought it? If you use it to ferry the kids to school on your way to the office, and pick up the groceries on the way home, that means it is partly for private use. Even the commute to work is private use. Only the VAT on cars used solely for business purposes, insured as such and kept at the business premises, is reclaimable.

On the other hand, you can reclaim the VAT if you buy mobile devices for your staff. If they are then used for personal reasons as well as business use, you can only reclaim the VAT element of the cost of the business use. However, if you make a nominal regular charge to the staff member who has an iPad or laptop, you are technically leasing it, which is business use, so all the VAT can be reclaimed.

Of course, you keep all your bills for the requisite number of years. Have you ever received an invoice that didn’t show the VAT separately? Did you check whether the items purchased were VAT-able, and at what rate? If 20% VAT was due, how did you calculate the amount that you could claim back? You should have multiplied it by a sixth to come to the figure that HMRC will accept.

When Can you Reclaim VAT on Entertaining Costs

If you want to treat your loyal customers, or host a networking meeting, this is classed as entertaining third parties, for which VAT is not reclaimable. If some of your staff also attend, you may be able to reclaim a proportion of the VAT. Treating your staff to a summer outing or a Christmas party is a different matter. Staff entertainment is eligible to be added to your VAT return in the claiming section.

The government website has a whole section on VAT. To find out more about the rules on reclaiming, go to this page and follow the relevant links. Your local bookkeepers will also be a mine of information on VAT matters, so you would be wise to discuss any concerns you have with them.

Why the Human Touch is Still so Crucial in Customer Service

‘Press one for x, press two for xx, three for xxx, four to talk to one of our customer service representatives.’ How many times have you fumed through this scenario and breathed a sigh of relief when you heard the final option? Why do you occasionally see companies proudly announcing that you will always talk to a person when you call them? Doesn’t it make you feel good when you enter a shop and a member of staff steps up to welcome you in with a beaming smile?

Customers Like the Personal Touch

There’s no doubt about it. Even a live chat option online can relieve frustration and make a customer more inclined to do some business. Not only is it good for business, it’s good for staff too to have satisfying human interaction during their working day. Provided they are properly trained and know what they are doing, it makes for more job satisfaction and a loyal workforce.

What Skills are Needed?

Staff members need to be patient and friendly, to listen carefully to any customer concerns and be able to satisfy them. They should know as much as possible about your products and services, but also know their limitations and when to hand a customer over to someone better qualified to help.

The most helpful thing they can do is diffuse a difficult situation. Someone with the ability to calm down irate customers and satisfy them, so that they leave the premises or the phone call with no ill feelings, is worth their weight in gold for potentially rescuing the business reputation.

The Economics of Customer Service

Of course it makes sense to cut costs and remain competitive with automated services in some areas, like simple on-line transactions and bill payments. However, it is clear that it is still crucial to maintain the human touch in many others. Research has shown that giving people positive and stress free interactions by phone and in person induces feelings of trust and reassurance and makes them loyal and ready to come back for more.

If you are getting repeat business and a growing following through word of mouth, you won’t need to throw extra resources into crisis marketing. Why not discuss these elements with your local bookkeepers before you decide where to spend your assets on consolidating and growing your business.