New business regulations coming into effect this April

Each year, the government introduces regulatory changes affecting businesses on two common commencement dates. These dates are 6 April and 1 October.

There are a number of changes due to come into force on 6 April 2010. Some of the changes tie in with the financial year and so take effect from 1 April. Where that is the case, the earlier enforcement date is indicated.

What follows is a summary, but not an exhaustive list, of the more important new rules with which businesses will need to comply.

Taxes

VAT returns filing and payment go online

As from 1 April 2010, businesses that have an annual turnover exclusive of VAT of over £100,000 and businesses that register for VAT on or after 1 April will need to submit their VAT returns and make any due payments electronically.

Businesses that meet either category must file and pay online even if nil payments are due and even if turnover drops below the £100,000 threshold in the future.

Firms with an annual VAT exclusive turnover above £100,000, as of 31 December 2009, should have received a letter from HMRC informing them of the switch to electronic filing.

For businesses that are already registered and whose turnover remains below £100,000, the option to file by paper will still be open to them. HMRC is to review the situation between now and 2012 when it may become the case that all VAT-registered businesses will have to file and pay electronically.

Some firms will be exempt even if they meet the new criteria. They will be: subject to an insolvency procedure; or run entirely by owners whose religious beliefs preclude them from using a computer.

HMRC has also announced that, as from 1 April 2010, all cheque payments by post will be treated as being received on the date when the cleared funds reach HMRC’s bank account.

This means that VAT businesses which can still pay by post must allow enough time for the payment to reach HMRC and to clear no later than the due date shown on the relevant VAT return. HMRC has said that this change does not affect any cheque payments made by Bank Giro.

Any cheque payments that do not clear by the due date could be liable to a surcharge for late payment.

HMRC has reminded businesses that electronic payments, even when not obligatory, give firms up to seven extra calendar days to pay or, if the payment is made by direct debit, at least ten extra calendar days.

Business rates

The latest business rate revaluation takes effect from April 2010.

Another business rates date to look out for is 31 March. That is the cut-off point for firms that wish to claim a rebate on business rates that may have been overpaid in the past. Businesses that believe they may have been overcharged on their rates’ bills during the past five years have until 31 March to submit an appeal to the Valuation Office Agency (VOA).

There are two main grounds on which businesses can appeal against the rateable value of their premises. They can demonstrate that they are paying more than neighbouring properties. Businesses can discover what neighbouring premises pay, and whether or not they have appealed against the amount, by visiting the VOA’s website at http://www.voa.gov.uk

Or firms can prove that there has been a ‘material change’ in their circumstances since 2005. This means something has altered in the immediate surroundings – such as a high proportion of empty shops – the effect of which has harmed trade. It may mean that there has been a change in the size or use of the firm’s premises itself.

Landfill tax

As from 1 April, the standard rate of landfill tax rises from £40 to £48 per tonne, applying to disposals that occur on or after that date. The lower £2.50 rate per tonne, which covers inactive waste such as rocks and soil, is unchanged.

Employment

The right to request training

As from 6 April, employers with 250 staff or more will be obliged to give serious consideration to requests from employees who wish to take time off to train.

Employees can ask for time to pursue training that will enhance both their own performance and that of the business. The nature of the training either can lead to an accredited, recognised qualification or it can simply improve skills that are relevant to the role of the employee or to the workplace.

Under the regulations, employers have 28 days in which to respond to a request, either accepting it and acknowledging so in writing, or meeting with the employee to discuss the issue, 14 days after which the employer must tell the employee in writing of the decision.

Employers can insist on changes if they agree to the request, such as switching the training in house or recommending an alternative course or qualification. Employers can also turn down a request for specific business reasons.

The right to request time off for training will include all employees as from 6 April 2011.

Sick leave and ‘fit notes’

As from 6 April, the way that sick notes are framed changes.

Under the current rules, medical certificates or sick notes are given by doctors to employees, stating whether they are or are not well or fit enough to work.

The new rules mean that doctors will be able to issue a new certificate, or ‘fit note’, advising if an employee is unfit for work or if they may be fit for work.

In cases where an employee is deemed as ‘may be fit for work’, the doctor can provide the employer with advice about the employee’s health and, if it is pertinent, with suggestions about the sort of changes – reduced hours, amended duties – that could allow them to return to work in some form.

Employers do not have to act on the doctor’s advice, but doing so may stop long-term sick leave absences and prevent the loss of the skills and expertise of key staff members. Where employers are unable to make the adjustments necessary for an employee’s return to work, they should treat the ‘fit note’ statement as a ‘not fit for work’ statement for purposes of sick pay.

The Department for Work and Pensions has produced guidance for both employers and doctors on the fit note scheme, which can be found at http://www.dwp.gov.uk/fitnote

Data protection

As from 6 April, the Information Commissioner has the power to issue penalties of up to £500,000 where businesses are found guilty of a serious breach of the rules on data protection. To incur the penalty, businesses must have committed a breach of the regulations that are likely to have caused significant damage or distress.

Pensions

Pension savers who wish to use their retirement pots sooner rather than later will need to act quickly if they are not to be faced with a five-year wait.

This is because the age at which people can draw on their personal retirement funds rises as of 6 April from 50 to 55.

Under the rules at the moment, anyone who reaches the age of 50 can have access to their personal or workplace pension fund. This gives them the option of taking 25 per cent of their retirement savings as a tax-free sum. But come the end of the current tax year, on 6 April, the age threshold moves up to 55.

After that date, people will need to wait a further five years before they can receive payments from an occupational or personal pension scheme.

The only exceptions are those suffering severe ill health or those who are allowed to begin their pensions at an age lower than that protected by pension tax law.

The changes are part of reforms introduced by the government in 2003. Before the reforms, different types of pension scheme offered members different ages at which they could start to access their pension savings.

The 2003 regulations set in place a basic, across-the-board minimum age of 50 at which people could draw on pension funds that qualified for tax relief.

The same regulations are now raising the minimum age to 55 in April 2010. The upper age limit for drawing a pension – 75 – is unaffected by the rules.

With the April date approaching, anyone under 55 wishing to draw down their pension early should act soon as it requires time to secure the funds from pension providers or insurance companies. It can take an average of 38 days between informing a pension provider of an intention to access a pension fund and getting the funds in place to buy an annuity.

However, savers and investors are also being warned that it is not always a financially beneficial move to opt for early access to a pension.

Most people are advised to wait until they reach 60 or retire fully before accessing their pension fund. Anyone contemplating doing so early should first seek expert advice.

Environment

Larger businesses may be required to implement measures under the CRC Energy Efficiency Scheme.

Coming into force on 1 April, the new rules require large organisations with annual electricity bills of £1 million or more must report their energy usage. Those that misstate their carbon emissions could be liable to a penalty.

Building work

Firms in the building trade will need to comply with rules introduced by the Building Regulations 2000. These include minimum water efficiency and maximum bath water temperature requirements for new buildings.

Other imminent changes

By the 19 May, all small employers with between five and 50 staff must submit their annual returns online. Paper filing will not be an option.

Employers with between one and five employees will be given a further year in which to prepare themselves for online filing. Employers with more than 50 workers have been obliged to send in their annual returns online since 2006.

In its statement on the change, HMRC said that any affected employer who submits a paper return, even if it’s before 19 May, could be liable to a penalty charge.

As from May 2010, HMRC will also be introducing new penalties for late payment of PAYE, including income tax, national insurance contributions, student loan deductions and construction industry scheme deductions.

Fines will henceforth be worked out as a percentage of the amount paid late instead of being issued as a fixed sum, ranging from 1 per cent to 5 per cent of the amount outstanding. For in-year payments, the percentage charged will rise as the number of late payments in the year also rises.

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