New Legislation Every Business Needs to Know About in 2017

If you are a business owner or an employer, you’ll know that with every New Year that rolls around, new legislation comes with it. 2017 is no exception to this, and there is a variety of new rules and laws on the horizon.

Business owners need to be aware of what’s about to change, so here’s a guide to what you need to know this year.

Living Wages and Minimum Wages

There will be a rise in the National Living Wage from 1^st April 2017, as it goes up to £7.50 per hour. Similarly the National Minimum Wage is also set to increase to the same amount for over 25s, and increases to all other age ranges too.

VAT Flat Rate Scheme

Another change coming into fruition on the 1^st April regards the VAT Flat Rate Scheme.

HMRC is concerned that some businesses are using the Scheme to pay less VAT than they should, which has caused Chancellor Philip Hammond to introduce the changes. These changes will apply to those businesses operating with a very low cost base, which will now be considered ‘limited cost traders’. These traders will still be able to use the scheme, but will be subject to a flat rate of 16.5 per cent.

To clarify, a limited cost trader is one that spends under 2 per cent of its sales on goods (not including services) during an accounting period.

Apprenticeship Levy

Also coming into force on 1^st April is the new Apprenticeship Levy. The Levy is set to replace all taxpayer funding of apprenticeships for companies of all sizes. 0.5 per cent of an employer’s wage bill will be paid via PAYE. All companies will receive an offset allowance of £15,000 which equates to 0.5 per cent of a £3 million wage bill, and all employers with a payroll over this amount will be subject to paying the levy.

Equal Pay

From 6^th April 2017, the Equality 2010 (Gender Pay Gap Information) Regulations 2017 will come into play for all private and voluntary sector employers. From this date, any companies with 250-plus employees within the private or voluntary sector will be required to publish prescribed information regarding their gender pay gap. Each qualifying company will need to publicly display this information on their website by 4^th April 2018.

Many legislation changes can, of course, be managed by your local bookkeepers. If you’re unsure on any of the changes, it’s worth seeking advice from relevant guidance teams to help you navigate your way through the new legislation.

Understanding the Law on Unfair Terms and Conditions

The Competitions and Markets Authority (CMA) has launched a campaign to help customers know the rules on unfair terms and conditions and to help businesses keep within the law when it comes to unfair terms. But, according to a poll carried out by the CMA, 54 percent of business owners to not understand the rules themselves.

What Constitutes Unfair Terms and Conditions?

So what exactly do business owners need to be aware of when it comes to terms and conditions? Well, these are usually the terms that give businesses an unfair advantage over the consumer.

These can include, but aren’t limited to, the following:

• Enforcing an excessively long notice period that keeps customers tied into a contract for longer than they want.
• Keeping all of a customer’s deposit if they cancel, regardless of the actual cost of the cancellation to the company.
• Excluding the business’ liability for actions that are its fault, such as delays or faulty goods.

Companies should also be aware that even if they use the terms and conditions from larger companies as a basis for their own, they are not necessarily legal and binding.

Terms that cannot be Enforced

The CMA’s research has also suggested that many companies believe that a signed terms and conditions contract means that their terms can be enforced, when, in actual fact, this simply isn’t true. Terms such as the above can’t be enforced if they are deemed unfair, despite them forming part of the contract.

Keeping on the Right Side of the Law

Companies which do try to impose unfair terms and conditions could find themselves on the receiving end of action taken by Trading Standards. The CMA stated that they are aware that most businesses wish to do right by their customers, but are simply unaware that their terms and conditions could be unfair.

For those companies that would like more guidance, the CMA has produced several videos and an at-a-glance guide to outlining fair terms and conditions, as well as producing a more detailed guide for those that wish to learn more. You can also discuss such matters with your local bookkeepers if you want some tailored advice.

New Small Business Taskforce to Speak up for SMEs

A new taskforce has been set up to act as the lobbying voice for small to medium sized businesses in the UK. By bringing together some of the key SME membership organisations into one lobbying group, it is thought that the Small Business Taskforce, which is the brainchild of Emma Jones of Enterprise Nation, will become the voice of small businesses.

Uniting Membership Organisations

Key SME bodies have been attracted to the new taskforce. These include the Forum of Private Business (FPB), the National Enterprise Network (NEN), the accountancy body ICAEW, the association for freelancers IPSE, and the Centre for Entrepreneurs (CFE).

By joining forces, these membership organisations reach nearly two million small businesses within the UK, which makes up almost half of the total SME population.

The Federation of Small Businesses (FSB) and the British Chamber of Commerce (BCC) are not yet official members, but they will work alongside the taskforce on an issue-by-issue basis.

Making the Voice of Small Businesses Heard

The aim of the new taskforce is to champion the needs of small businesses by lobbying the government in an attempt to reach out to ministers. This will mean that the government can consult small and medium sized firms before introducing new regulations, such as the likes of quarterly tax reporting, which is something that has been concerning SMEs of late.

Five Key Points from the Small Business Taskforce

An open letter to all ministers, including the Prime Minister Theresa May, has been written by the Small Business Taskforce. They have called for five key recommendations for the Government, which are:

• A workable tax regime which is created in consultation with SMEs
• Accessible business support
• International trade for all
• Support for a flexible workforce, which includes ensuring that EU works resident in the UK have long-term residential rights
• Continued consultation with small to medium sized businesses

By working together with small businesses, the idea of the taskforce is that it will promote a prospering economy for our country whilst still listening to the needs of SMEs.

Banks Must Now Offer an Alternative to Businesses Turned Down for Finance

From 1^st November, it became a legal obligation for the UK’s nine major banks to refer any small to medium businesses who they have refused for finance to an alternative provider.

The Bank Referral Scheme

As part of the Small Business Enterprise and Employment Act 2015, the new bank referral scheme is aimed at making life for smaller sized businesses more straightforward through numerous changes, one of which being the bank referral scheme.

The scheme will mean that it is compulsory for banks to refer any small to medium business that they turn down for lending to an alternative finance platform. Three of these platforms have been pre-approved for referrals. They are: Funding Xchange, Business Finance Compared and Funding Options. Their job will be to put potential business borrowers in touch with alternative finance options.

By doing this, it’s hoped that by providing an easy access route and transparency it will aid growth in the UK, and has been hailed as ‘vital step’ in boosting the supply of business finance to small to medium businesses.

Half of First Time SME Borrowers Rejected for Finance

Before the scheme was put in place, the Department for Business, Innovation and Skills, which was replaced in July 2016 by the Department for Business, Energy and Industrial Strategy, reported that 50 percent of SMEs had been rejected for finance. In turn, this led to 37 percent cancelling their additional spending plans.

Indeed, The British Business Bank estimates that 100,000 small businesses are rejected for finance by banks each year; this is the equivalent to a £4 billion shortfall in business funding.

It is thought that only 3 percent of small to medium businesses that are rejected for funding go on to seek alternative finance sources, and it is therefore hoped that by offering the Bank Referral Scheme, a range of finance options will open up to the UK’s smaller businesses. After all, comparison sites are available for the likes of insurance, flights and credit cards, so why not business finance too? If you are seeking advice on funding for your small business, why not talk to your bookkeepers?

Why Directors Facing Insolvency Must Beware Transactions at Undervalue

When a director of a company is facing insolvency, the thought may well occur to them to that it may be a good idea to sell or transfer company assets as quickly as possible in order to protect them.

However, it’s actually a requirement for company directors to maximise creditor returns during insolvency, and therefore by selling or transferring assets at an undervalue they could be considered to be carrying out wrongful or fraudulent trading. Company directors therefore need to be very careful of transactions at undervalue if they are facing insolvency.

What are Transactions at Undervalue?

A transaction at undervalue is a transaction which doesn’t reflect the asset’s true market value. This can be either a sale of an asset or a transfer of assets. This can be a problem as company directors are required to maximise their creditors’ returns during insolvency, and as such these transactions can be seen as fraudulent or wrongful.

During insolvency, it is the job of insolvency practitioners to closely inspect all company transactions, and they will highlight any that they feel are questionable or suspicious. Administrator and liquidators then have the power to apply for a court order which can reverse any transaction at undervalue and restore the situation to the state it was at before the transfer or sale took place.

It’s not just the most recent transactions that will be inspected, either; insolvency practitioners may look into a company’s transactions for up to two years before the point where they went into administration. If they find any transaction which has a significantly reduced value, or gifts which have been made without an associated payment, they are duty bound to make a report to the Secretary of State.

How are Undervalue Transactions Penalised?

Transactions at undervalue are a breach of the Insolvency Act 1986, meaning that company directors that undertake this practice could face both financial penalties as well as the prospect of criminal prosecution. Indeed, company directors can be held personally liable for some or all of the company’s debts, and may also be disqualified for up to 15 years if it is believed that they have traded wrongfully during insolvency.

Following Formal Insolvency Procedures

It’s therefore extremely important that company directors think very carefully before they decide to trade at undervalue in order to try to protect company assets. Creditor interests must always come first, and if you want to avoid any accusations of transactions at undervalue, it’s important that company directors follow a formal procedure for selling or transferring assets.

This process usually requires a board meeting in the first instance where all action is carefully documented. A RICS qualified surveyor or valuer should be appointed to make sure that going concern and forced sales values are provided. Once assets have changed hands, it’s also important to ensure that funds are banked swiftly and full records retained for several years following the statutory requirement.

If you are at all unsure on how these records need to be maintained, consult the advice of local bookkeepers. They will be able to ensure that your documentation and paperwork is present and correct.

Fake Bailiff Warning for Businesses

Local businesses have been warned of a fake bailiff scam. Police have been warning businesses that conmen are contacting companies requesting payment for non-existent debt.

The conmen are targeting small to medium sized businesses primarily, often after finding their contact details in online business directories. They then phone them and try to extract cash from them by claiming that they are behind with certain fees.

Businesses Targeted

A range of businesses have so far been targeted, including nurseries, manufacturers, taxi services and hotels, however all business types are at risk from the scam.

Police have found that the fake bailiffs seem to be targeting those businesses with slightly more mature and elderly directors, who are traditionally seen as the victims of such scams.

Cold Calls

Businesses are finding themselves at the mercy of cold calls from these fake bailiffs. They are purporting to be bailiffs working on behalf of the court, attempting to recover debts which don’t exist.

The targeted companies are then requested to make payment by means of a bank transfer, and, if the contact that the conmen are dealing with refuses, the fake bailiffs threaten to visit the premises in order to recover the debt that they claim is owed to them.

Dealing with the Conmen

The advice from the police, Trading Standards and the accounts managers at the business directories for dealing with the conmen is to ask for details of the debt collection agency, and if you are at all suspicious, hang up the phone. Do not under any circumstances agree to transfer money or give your bank details.

Once you have hung up the phone, report them to Trading Standards who can investigate.

Are you Wasting Too Much Time on Admin?

Do you find yourself constantly tied up in the red tape of admin? Struggling with day to day financial tasks such as tax calculations and payroll, when all you really want to do is work on the products and services you offer? If so, you’re not alone.

According to Tide, 63 percent of young businesses are spending too much time on admin. At least one day a month, to be precise. And these tasks typically include the likes of administrative financial tasks, tax calculations, invoicing and paying invoices, expenses and setting up bank accounts.

So are you wasting too much time on admin?

Bank Account Woes

Some of the biggest problems that the 149 small business owners surveyed had were with their bank accounts. To this end, more than a third rated the help and support that they received from their bank accounts as poor or very poor, and two thirds said that they wouldn’t be likely to recommend their bank to other business owners.

36 percent of respondents also commented that they were dissatisfied with the ease of use of their business bank account.

Financial Admin Difficulties

And the financial administration problems don’t stop there. According to the survey, other admin difficulties can be found in the likes of tax calculations, accounting, recording and paying expenses, invoicing, payroll and having to manage multiple different financial applications.

When asked, the top five things that most new business owners had on their wishlist to make their lives easier included:

• Easy internet banking (listed by 80 percent of respondents)
• A good mobile app (66 percent)
• Free transactions (54 percent)
• A speedy set up (39 percent)
• A good length to the free banking period (36 percent)  

Factors the respondents didn’t rate highly included some of the more traditional aspects of banking, such as banks offering an overdraft, telephone support or the proximity of a local branch.

The Wisdom of Age

The report also found that the age of the business had a factor in determining which admin tasks companies struggled with the most. For those businesses less than a year old, tax was one of the aspects that they found hardest to deal with, whereas more established companies found that the responsibilities of payroll were more of a burden.

No matter what difficulties you may be experiencing as a company, or how established your firm is, the expertise of local bookkeepers could be all you need to keep your administration in order. Speak to your local bookkeepers today to establish how they can stop you from drowning in admin.