ContractStore Legal Business Blog

Agency workers may soon be entitled to the same salaries, paid time off and sick pay if a bill, soon to be debated in Parliament, succeeds. The private members’ bill, which comes as a result of pressure from Europe, won a crucial vote at the committee stage on Tuesday.

Both opposition parties attempted to stall the passage of the bill through Parliament by proposing an amendment. This was defeated by a concerted effort from Labour backbenchers, so the bill will go through to the next stage.

The employers’ organisations - the EEF and the CBI - both expressed dismay at the vote.

According to the CBI, the bill is” bad legislation that would be damaging for business and would not benefit vulnerable workers.” A spokesman for the EEF said “the bill can only increase manufacturers’ costs and administrative burdens, threatening UK manufacturing jobs.” However, the TUC welcomed the proposals.

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If you like champagne you could be in luck with our very short SME survey. You’ll be helping to create a snapshot of SME’s and how well they protect themselves legally, and you could win six bottles of beautiful bubbly.

Click here to take the survey - and good luck!

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ContractStore had a fantastic time at the Business Start-Up exhibition in the Docklands ExCel centre for a couple of days (27-28 April).

We met 100’s of entrepreneurs at the show, including Caprice Bouret, supermodel and now head of a highly successful lingerie and swimwear business.

We thoroughly enjoyed meeting everyone and we learnt a great deal about what start-ups are looking for and the problems they face. It’s going to be extremely useful to us as we develop the ContractStore business, so a big thank you to everyone who came and talked to us about their needs and experiences.

Don’t forget we are also running a prize draw for a half-case of champagne. Just go to the survey online to take part.

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The OFT (Office of Fair Trading) has today published a report to measure the overall value of consumer detriment in the UK economy i.e. where a consumer suffers unfair treatment from its dealings with an organization. For every 1000 consumers interviewed, 542 problems were identified, and across the whole of the UK population this equates to an estimated 26.5 million problems over the last year.

The report was compiled using information from 10,000 consumers, and estimates the cost to consumers was around £6.6 billion in the last 12 months. It was commissioned to establish where consumers were suffering the most harm through poor products and services.

The report found that on average, the highest level of financial detriment occurred in the insurance sector, followed by home maintenance and improvements, and personal banking. The report also concluded that the goods or services which consumers reported the highest proportion of problems were telecommunications, domestic fuel, and personal banking.

However, only 64 per cent of respondents complained or took action to rectify their problem, and this was higher for problems occurring in the insurance, personal banking, internet and domestic fuel sectors but lower in the small domestic appliances, medical goods and services and postal services.

One important finding was that there was more detriment to consumers where problems were less numerous and more costly (79% in products or services over £1000), than from more frequent problems that were less costly (0.3% where the product or service was less than £5). The findings of the report will now be analysed and used to help the OFT prioritise future work.

Download a copy of the report from the OFT website - http://www.oft.gov.uk

Consumers wanting to complain about a product or a service should call Consumer Direct for clear, practical consumer advice on 08454 04 05 06 or http://www.consumerdirect.gov.uk.

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On 6th April some more sections of The Companies Act 2006 come into effect. This is the longest statute ever passed by Parliament and its implementation by stages merely adds to the difficulties created for those who have to advise on the subject.

Among the new rules that may be of interest to readers of this blog are:

• A document can be validly executed by a company if it is signed by only one director provided his signature is witnessed by someone else. This is in addition to the existing rule that the signature of two directors or a director and company secretary are required for execution as an alternative to using the company seal. (Section 44)
• A private company will no longer have to have a company secretary - but if the Articles of Association require a secretary, then the company will need to change the Articles before ditching the company secretary. (Section 270)

Also, the 56 pages of Part 15 of the Act dealing with the accounts of a company come into effect (with one exception concerning the requirement for companies  to include a ‘business review’ in the directors’ report). 

Among the new items:

• Directors must not sign accounts unless they are satisfied they give a true and fair view of the financial position of the company. 
• The time for filing annual accounts at Companies House for private companies is reduced from 10 months to 9 months after the end of the financial year in the case of private companies and to 6 months instead of 7 months for public companies.

In addition, auditors will be able to have their liability for negligence limited if a company signs a ‘liability limitation agreement’ - but this must not last for more than one financial year, its terms must be ‘fair and reasonable’ and shareholders have to approve the agreement.(Sections 527-538)

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Budget 2008 - how it will affect you

The Chancellor’s Budget includes confirmation of the cut in the basic rate of Income Tax to 20 pence from 22 pence, a delay to the planned increase in fuel duty, and measures aimed at tackling climate change.

Personal taxation

A number of changes announced in last year’s Budget will come into effect from 6 April 2008 (the 2008/9 tax year):

• the basic rate of Income Tax falls from 22 per cent to 20 per cent
• the 10 per cent starting rate of Income Tax is abolished
• the personal allowance increases to £5,435; the age-related personal allowances rise to £9,030 for people aged between 65 and 74, and to £9,180 for those aged 75 and over

Child Benefit, Guardian’s Allowance and Tax Credits

Child Benefit for the eldest or an only child goes up 70 pence to £18.80 for 2008/09. For other children, the amount rises 45 pence to £12.55. Guardian’s Allowance increases 50 pence to £13.45. The ‘first child’ rate increases to £20 a week from April 2009. Also:

• the child element of Child Tax Credit increases by £150 a year
• the threshold for Working Tax Credit increases by £1,200 to £6,420

Pensioners

The Budget announced an increase of £100 to over-80s households and £50 to over-60s households in 2008/09, via their Winter Fuel Payment.

Savings

The overall annual investment limit for ISAs rises to £7,200, of which £3,600 can be in cash, from 6 April 2008.

The ten pence starting rate of tax is removed for non savings income and replaced with a new ten pence starting rate for savings income with a rate limit of £2,320.

Alcohol and tobacco

Alcohol duty rates increase from 17 March 2008. The duty increases will add four pence to the price of a typical pint of beer, 14 pence to the price of a typical bottle of wine, and 55 pence to the price of a typical bottle of spirits.

Duty on tobacco rises in line with inflation - 11 pence on a packet of twenty cigarettes.

Motoring and transport

The two pence per litre increase in fuel duty previously announced by the Chancellor has been delayed until 1 October 2008.

Vehicle Excise Duty (VED, or ‘car tax’) for the most polluting vehicles increases by £100 to £400 (for petrol and diesel cars in the graduated VED band G. Other bands see increases of £5).

The environment

From 2009, alongside the Budget there will be a five year carbon budget setting carbon emissions; and the long-term target for emissions reductions has been increased to 80 per cent by 2050.

Specific proposals include the introduction of legislation in 2009 to impose a charge on single-use carrier bags - the money raised would go to environmental charities.

The Stamp Duty Land Tax exemption for zero carbon homes is extended retrospectively to new flats from 1 October 2007

Charities and Gift Aid

The Budget announced a package of measures aimed at increasing the take-up of Gift Aid, including the introduction of a transitional rate of 22 per cent in 2008/09.

Measures were also taken to reduce burdens on charities, including reforms to the audit process and a programme for bringing more smaller charities into Gift Aid.

Inheritance Tax and Capital Gains Tax

Previous Budgets announced Inheritance Tax allowances - for 2008/09, the allowance is £312,000 for individuals and £624,000 for married couples and civil partners.

For more information go to: http://www.direct.gov.uk/en/Nl1/Newsroom/Budget2008/DG_073037

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Very many businesses have no proper system for ordering goods and services so we have come up with a set of forms to remedy the problem.

This is to ensure help you keep a proper record of all your orders. This can be useful in many ways, especially to ensure that the key terms are complied with by your supplier.

The order form is prepared with a space for signature by both purchaser and supplier, so you should, ideally, issue two signed copies, one for each signatory.

There are four forms in the new collection:

• Purchase Order for Goods
• Purchase Order for Services
• Acceptance of Order for Goods
• Acceptance of Order for Services.

You can also download the full set and save about 50% of the price - click here.

Like all our documents they are in Word format so you can edit directly before use.

These are a key set of basic documents that are great to have especially if you are starting up.

If you have had a problem with purchase orders or similar agreements we’d like to hear about it.

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The Government’s assault on small business has had a slight reprieve with the latest change of mind concerning capital gains tax. Last autumn, the Chancellor announced the ending of the 10% rate for businesses and the introduction of a new, flat rate of 18%. Since, ostensibly, the change was intended to do something about the massive gains of private equity firms and the people most hit would be owners of small and medium businesses, there was a fully justified outcry.

The latest position – which still has to be confirmed in the Budget next month – now seems to be:

• A flat rate of 18% will be charged on all capital gains from April – this will cover business and non-business gains, so the same rate will apply whether you are selling your business, a painting or a buy-to-let property
• The first £1 million of gain will be at the rate of 10% for certain business assets – this is to be known as ‘entrepreneur’s relief’.
• Indexation allowance and taper relief will no longer apply – i.e. there will be no adjustment to the rate however long you have owned the asset. Gains on assets owned on 31 March 1982 will be calculated by reference to their market value at that date.
• In our view it is time for the Government to introduce a fairer tax system that taxes the mega-profits of the City instead of the hard-earned gains of smaller businesses.

The Chancellor might say he is trying – but his clumsy proposal to impose a £30,000 charge on non-doms is not the cleverest idea to come out of the Treasury. And small businesses have already suffered recently with the removal of the corporation tax exemption for the first £10,000 of profits.

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Every Gulf country has laws governing the appointment of commercial agents, and an agency agreement may have to be registered with the Ministry of Economy or some other government department. Great care is needed in selecting an agent. Amongst the factors that you need to look at is the capability of the agent.

Also check out his standing and reputation. It is not going to be easy to run a Dun and Bradstreet check on prospective agents. Instead, you need to make enquiries - of the British Embassy, Bank, other companies - including other principals of the prospective.

Other considerations include the agent’s facilities, location and whether the prospective agent acting for your competitors.

In terms of the Agency Agreement and legal implications in the UAE, Saudi Arabia, Qatar and Oman, only a national or a company wholly owned by a national can act as commercial agent or distributor within the state. In Bahrain and Kuwait a company with foreign participation can act as an agent provided that 51% of the shares are owned by nationals.

In the UAE and Qatar an agent is entitled to commission on all sales of the principal’s products in the territory, irrespective of whether the sales have been made by the agents. In Bahrain and Saudi Arabia, the situation is slightly different. In Saudi Arabia, for example, principals are free to restrict the agent’s commission only to sales which are actually made by the agents.

The general rule throughout the Gulf is that a registered agency agreement cannot be unilaterally terminated by a principal.

An agent can claim compensation for termination or non-renewal based on the success which the agent has brought to the business with the principal.

As a lawyer, I would strongly recommend that you take legal advice before you finalise an agency agreement.

View the other posts in this 4 part series:

• Doing Business In the Gulf And Middle East (introduction)
• Opening an office in the Gulf
• Free Zones in the Gulf

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If you don’t like the idea of having a local partner or sponsor for your business in the Gulf, especially if your business is going to involve having a distribution centre - or an assembly plant - in the region, then you should consider going to one of the free zones. You don’t need a local partner - in effect the Free Zone authority is your local partner and issues your company with a licence. Your company therefore remains 100% yours and free repatriation of capital and profits are guaranteed for 15 years and in some cases for 50 years. Fujairah has a good free zone – and they have an advantage of having their port outside the Gulf, on the Indian Ocean.

Free Zones are not confined to industry – Dubai, currently leading the pack in attracting foreign business to the region has an internet city and has recently set up the DIFC (Dubai International Financial Centre) which has its own legislation, regulatory regime on Western lines and even its own civil court, presided over by an English judge.

View the other posts in this 4 part series:

• Doing Business In the Gulf And Middle East (introduction)
• Opening an office in the Gulf
• Appointing Agents In the Gulf

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