The No-Nonsense Guide

to Government rules and

regulations for setting up
your business
2006
Thinking of starting
up on your own?

Need help with

rules, regulations
and forms?
If you’re thinking of running a business or
working for yourself, The No-Nonsense Guide
saves you time, stress and money. It tells you
what you need to know about the legal and
official side of starting up on your own.

And if you’re working out what could happen

as your new business develops, the Guide
also explains the regulations that might
affect a growing business — from getting new
premises to employing people.

Get it right from

the start with
Business Link
When you decide to go ahead and set up
in business, the best thing you can do is to
contact your local Business Link at an early
stage. The Business Link Service is available
locally and provides the information, advice
and support you need to start, maintain and
grow a business.

This No-Nonsense Guide explains the rules

and regulations that might affect your new
business. But your Business Link, besides
advising you on these rules, will also help
with all the other important issues you
need to consider before starting up — from
researching your market to preparing a
business plan and raising finance. Initial advice
is free, with other services at affordable rates.

Contact Business Link for a wealth of

information and support services to suit your
individual needs: www.businesslink.gov.uk or
0845 600 9 006. For the equivalent services in
Scotland, Wales and Northern Ireland, please
see page 90.
 How to use
The No-Nonsense
Guide

Finding a subject
a Check the two pages opposite to find the
subject you want and its page number.
The guide is arranged into 12 colour-
coded main sections. Within these sections,
individual topics are covered separately,
each with its own sub-heading.
So if you want to find out about the
various ways of accounting for VAT, go to the
main section headed What VAT Will Mean
For You. Just over halfway down, one of the
sub-headings for VAT highlights your topic
— Accounting Methods For VAT — and its
page number.
It’s unlikely you’ll have to be bothered
with all the requirements listed in the
Contents opposite — or at least not at the
beginning of your business venture. But you
can see at a glance what might apply to you,
now or in the future.

Next steps
b Sometimes things are mentioned in the
text that require further action or
information — such as registering your
payroll or getting the right VAT form. You
will find what you must do and where to get
more information in the Next steps box at
the end of the sub-section. Next steps also
gives you page numbers for other entries in
The No-Nonsense Guide that are relevant to
that topic.

Case studies
c And to give you some tips on how other
small businesses have tackled Government
rules and regulations, we’ve included the
first-hand experiences of people who have
already set up in business.

Check for changes in the law

d Regulations, figures and sums of money
may have changed since publication.
Update check: 0845 600 9 006
www.businesslink.gov.uk/figures
Contents
Forming a business
Sole trader 
Partnership 
Limited liability partnership 
Limited company 
Choosing the right name
Franchises, social enterprises,
co-operatives and charities
Tax forms when an employee Minimum workplace standards 35
4 leaves or dies 21
Carrying out a risk assessment 36
Business vehicles and tax 21
4 Registering your business 36
Special tax rules for the
4 Insuring your employees 37
construction industry 22
4 Informing your staff about
Your business rates 23
health and safety 37
5
Protecting your employees 38
8
What VAT will mean Computers and employees 39
9 for you 24 Reporting incidents 39

What is VAT? 24

Sorting out your What VAT rate will I have to Protecting your
tax and charge? 24 intellectual property  40
National Insurance  10 Keeping VAT records 25
Business names and domain
Accounting methods for VAT 27
names 40
Your employment status  10
VAT on imports 28
Protecting your trade marks 40
Employed or self-employed?  10
VAT on exports 28
Patents and their benefits 41
Tax and National Insurance
VAT on business vehicles 29
for the self-employed  11 Understanding copyright  43
Tax for a limited company  12 Registered design and
design right 44
Calculating expenses of the Premises and health
business  13 IP protection overseas  44
and safety  30
Capital allowances for Software copyright and
equipment and premises  13 Planning consent for licences 45
How capital gains tax works  15 businesses 30

The tax return for individuals  16 Using your home as your

workplace 30 Is your business in a
The tax return for companies 17
Fire protection 31 specialised sector?  46
Working out tax and NI for
employees  17 Ensuring easy access for
Food businesses 46
disabled people 32
Paying employees’ tax and NI 18 Entertainment and leisure 46
Managing and transporting
Statement of employees’ pay, waste and packaging 33 Health and care services 46
tax and National Insurance 19
Other environmental concerns 35 Transport businesses 47
Employees’ pay records at the
Health and safety essentials 35 …and many other special
end of the tax year 20
cases 47

The No-Nonsense Guide

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The national minimum wage 62 Dismissals which are

Trading regulations Staff who are off sick 63
automatically unlawful 84
and data protection  48 Giving notice of dismissal 84
Arranging employees’ pensions 64
Written reasons for dismissal 85
Describing goods and services 48 Length of the working week 65
Constructive dismissal  85
Terms and conditions of sale 48 Giving staff rest breaks 65
Handling redundancy 87
Special rules for shops 51 People working at night 67
Qualifying for redundancy pay 88
Distance selling 51 Paid annual leave 67
Sale or transfer of a business 89
Selling and marketing Time off work other than
electronically 53 annual leave 68
Accepting credit and debit Discrimination due to race, sex,
cards 53 age, religion or belief 69 Government advice
Getting paid on time 54 Workers with disabilities 71
and support  90

Court action for debts 54 Rights of part-time workers  71 Make Business Link your
Preventing money laundering 55 Right to belong to a trade first port of call 90
union 72 Grants and other types of
Insuring against liabilities  56
When an employee is pregnant 72 government support 90
Data protection 56
Pay on maternity leave 75 A government grant could
help you start 91
Paid paternity leave  76
How the Government can
Recruiting your first Paid leave for adoptive parents 77 help you get a loan 91
employee  58
Unpaid leave for parents 78 Government tax relief and
How to recruit and select Employees and flexible credits to help research and
employees 58 working 79 development 92

Eligibility to work in the UK 58 Equity finance from venture

capital funds and business
Drawing up employment angels 92
contracts 59 Resolving problems
with employees  80 Training for you and your
Changes to employment workforce 93
contracts 61
Discipline and grievance A boost for business in
issues 80 Enterprise Areas 94
The Acas Code of Practice 81 Help with exporting 95
Understanding
Monitoring email and Web use 81
employees’ rights  62 Help from your council 95
Valid reasons for dismissal 82
Insuring your employees 62 Dismissals which are
Workers and employees 62 automatically unfair 83 Useful contacts  96

The No-Nonsense Guide

 When you’re setting up in business, you’ll need to decide on the ‘trading form’ it will take.
Getting the right option for you means finding the right balance between keeping the
administration simple, protecting your personal assets and how you will be taxed in each case
Forming a business

Sole trader
Becoming a sole trader is the
most straightforward way to set
up in business
Setting up in business as a sole
trader is quick and easy and
involves little of the form-filling
associated with starting and
running a limited company. Sole
traders make their own business
decisions and don’t have to
answer to anyone else.
However, sole traders are
personally responsible for any
losses the business makes.
This means your own
possessions — including your
home — could be at risk if you
can’t pay your debts. And you
may also find it difficult to get
finance to fund your business.
Once you’re operational,
you must keep a record of the
business’s income and outgoings.
Despite the name, you don’t
have to be on your own; a sole
trader can take on employees.
Although sole traders are
often taxed as self-employed,
this isn’t automatically the case
even though you’ll be working for
yourself. If you are self-employed,
you must register with HM
Revenue & Customs within three
months of starting up (see Next
steps below).
Next steps
● See Employed Or
Self-Employed?, page 10
The No-Nonsense Guide
● It’s a good idea to seek help
from a business adviser or
solicitor when deciding the best
legal form for your business
● If you are self-employed, you
must register with HM Revenue
& Customs. Contact 08459 15 45
15; www.hmrc.gov.uk/startingup
Partnership
Forming a partnership allows
two or more people to set up
in business together, sharing
profits, management burdens
— and risks
Partnerships allow you to share
the responsibility of managing
a business. And joining forces
with other people may mean you
have more money to invest in the
business.
Partners share personal
responsibility for business debts.
They put their own possessions
on the line — including their
homes — if things go wrong. If
one partner can’t pay their share
of any debts, the other partners
become responsible for it.
Remember that a partner can
make business decisions or enter
into binding contracts without
the consent of other partners. It’s
sensible to draw up a partnership
agreement, setting out how the
partnership will be run and how
the proceeds will be split (it’s
best to use a solicitor). This will
help to prevent disputes.
Partners are often taxed as
self-employed but this isn’t
always the case. If you are self-
employed, you must register with
HM Revenue & Customs within
three months of starting up (see
Next steps below).
Next steps
● See Employed Or Self-Employed?,
page 10
● It’s a good idea to ask a solicitor
to help you set up a partnership
agreement
● If you are self-employed, you
must register with HM Revenue
& Customs. Contact 08459 15 45
15; www.hmrc.gov.uk/startingup
Limited liability
partnership
A limited liability partnership,
or LLP. shares many of the
features of a normal partnership
— but it also offers reduced
personal responsibility for
business debts
Members of an LLP are
protected from personal
responsibility for business
debts.
Their liability is limited to
the amount of money they have
invested in the business and to
any personal guarantees they
have given to raise finance.
As with a traditional
partnership, you share
management responsibilities

and potentially have more money
to invest in the business.
But forming an LLP is more
expensive and complicated than
setting up a partnership.
You have to send a registration
document (Form LLP2) to
Companies House and pay a £20
fee (£50 for same-day service).
A solicitor or company formation
agent can help you set up an LLP.
An LLP also brings a number
of extra running costs. For
example, you have to make
financial information about your
business publicly available by
sending a copy of its annual
accounts to Companies House.
You must also submit an annual
return giving key details of the
LLP and its members.
LLPs also have to have their
accounts audited. But those with
a turnover of less than £5.6m and
a balance sheet total of less than
£2.8m are normally exempt.
You should draw up a
partnership agreement setting
out how the LLP will be run and
how profits will be shared.
Members of limited liability
partnerships are often taxed
as self-employed but this isn’t
always the case. If you are self-
employed, you must register with
HM Revenue & Customs within
three months of starting up (see
Next steps below).
You can’t form an LLP if your
business will be a charity or not-
for-profit organisation.
}
We went for limited
company status straight
away as we felt it would gain
our customers’ confidence
more quickly
~
John Lawler
Madventurer
gap-year travel company
Newcastle-upon-Tyne
Forming a business
Check for changes in the law
Regulations, figures and sums
of money may have changed since
publication. Update check:
0845 600 9 006
www.businesslink.gov.uk/figures
Next steps

● See Employed Or Self-Employed?,
page 10
● It’s a good idea to ask a
solicitor to help you draw up a
partnership agreement
● If you are self-employed, you
must register with HM Revenue
& Customs. Contact 08459 15 45
15; www.hmrc.gov.uk/startingup
● You can get Form LLP2 from
Companies House. Contact
0870 33 33 636;
www.companieshouse.gov.uk
● For more information read:
Limited Liability Partnerships
— Formation And Names
(GBLLP1). Contact
0870 33 33 636;
www.companieshouse.gov.uk
Limited company
A limited company may offer
reduced responsibility for
business debts — but it
brings a range of extra legal
duties, too
Private companies are limited
by shares that generally protect
the individual from personal
responsibility for business
debts. Your personal risk will be
restricted to how much you invest
in the business and any financial
guarantees you have given in
order to obtain financing.
However, if the company fails
and you have not carried out your
duties as a company director, you
The No-Nonsense Guide
 It worked for me
How I went
about
forming my
business
After being made redundant,
computer engineer Roger Bee
set up Netguides Limited with
 his wife Dawn, operating at
first from their spare room.
Today, their Internet services
company turns over £400,000
a year and employs 13 people
}After I was made redundant,
working with the Internet
seemed to be something I
could do from home without a
lot of development funding.
I set up as a limited
company because I decided
to be a service to other
businesses primarily. So
I wanted to be able to put
'limited company' on our
letterheads, and sign myself
'director'. It made it look as if
we were well-established and
not just one guy working from
his spare room — which is
what we were really.
It was a perception thing
but when we started trying
to get business from large
organisations I'm sure that's
what got us through the door.
We VAT-registered for the
same reason.
The No-Nonsense Guide
Dawn and I did look at forming
a partnership but it didn't seem
to have enough advantages
for us. Also, we wanted a
business that would grow, so
we knew we'd have to go limited
eventually. We thought we may as
well do it from the start.
We could have bought an off-
the-shelf company but our legal
adviser said it would benefit us
to incorporate under a name
of our choice and handle the
process ourselves. Our solicitors
interviewed us, asking us what
we wanted to do, and they made
sure our Articles of Association
covered all the areas we
intended to work in. It was quite
painless.
We'd already spent a lot of
time thinking about a name and
had had several ideas. One was
Amaze, but although that was
available as a domain name on
the Internet it was already taken
at Companies House. We needed
to consider both aspects.
A lot of Internet service
providers have search facilities on
their websites where you can type
in a name and see if it's available
as a domain. We did the online
Companies House search for an
available name, too. It's a free
service and very valuable.
We plumped for Netguides
because the business strategy
then was to write an Isle of Wight
Net guide followed by others.
That never happened because
the business took off in a totally
different direction but the name
is still fine. We see ourselves
as Internet consultants, guiding
people in how to use the Net. I
think it would be a disadvantage
to pick a name that was too

Matt Griggs/UNP
could be liable to pay the
company’s debts or be
disqualified from acting as a
director in another company.
You can raise money for the
business by allowing individuals
or other businesses to subscribe
for shares in the company.
You can also give employees
the opportunity to own a share in
the business.
Alternatively, the company
may seek loans from banks or
other lenders, although lenders
will normally want personal
guarantees for the loan from you.
Setting up a limited company
may also bring marketing
advantages if it adds to the
perceived credibility of your
business.
Researching a name was Limited companies pay
important for Roger corporation tax on their profits, while
specific. You don't know which you will be taxed as an employee
way a business will go. of the company in the same way as
Setting up was very anyone else who works for you (see
straightforward and only cost Next steps below).
us a few hundred pounds. There are extra administrative
Next was getting the company costs associated with setting up
image right — but because we a limited company. The company
had the right name and were must submit annual accounts
limited, we could start working and tax returns to HM Revenue
on that. & Customs — on top of any returns
you must send on your own behalf
~
(see Next steps below).
A set of accounts also has to
be sent to Companies House,
making financial information
about your business publicly
available. You must also send
Netguides Limited Companies House annual returns
Newport, Isle of Wight giving certain details on the
Tel 01983 532255 company and its directors and
www.netguides.co.uk shareholders.
Limited companies must also
Forming a business
You also need business advice
This guide covers regulations. You
should also read a guide to general
business advice — from market
research to writing a business plan
have their accounts audited. But
most small companies with a 
turnover of less than £5.6m and
a balance sheet total of less than
£2.8m are exempt.
To set up a limited company, you
need to create a memorandum
of association and articles of
association, which have to cover
issues such as who will be
running your business, what it
will do and where it will be based.
These documents, along
with the standard registration
documents (Forms 10 and 12),
must be forwarded to Companies
House before you can start
trading. The registration process
costs £20, or £50 for a same-day
service.
Company formation agents
can handle the process for
you, registering your company
electronically with Companies
House (for a fee). You can register
a company yourself, but it’s worth
taking advice from a solicitor, an
accountant or a formation agent
to make sure you get it right
first time. The introduction of
electronic incorporation allows
formation agents and other
intermediaries to register a
company with Companies House
very quickly and at a competitive
cost.
Next steps
● See Tax For A Limited Company,
page 12
● See The Tax Return For
Companies, page 17
● See Working Out Tax And NI For
Employees, page 17
The No-Nonsense Guide

● You can get the standard
 registration documents
(Forms 10 and 12) for setting
up a limited company from
Companies House.
Contact 0870 33 33 636;
www.companieshouse.gov.uk
● Forms for the memorandum
of association and articles of
association are available from
legal stationers
● For more information read:
Company Formation (GBF1).
Contact Companies House:
0870 33 33 636;
www.companieshouse.gov.uk
Choosing the
right name
The right name for your
business can help you stand out
from the crowd — but there are
a few restrictions which could
affect your choice
Sole traders or partnerships
can trade under their own
names or choose a different
business name. However, if you
choose something other than
your own name you will have to
include your own name and the
business address on all business
stationery.
You must register the name
of a limited company or limited
liability partnership when it is
formed.
You cannot use offensive
names. And your proposed
company name must not be the
The No-Nonsense Guide
}
As a limited company we
had to check no-one else
was already using the same
name. Carrying out a search
on the Companies House
website was really easy
~
Rosie Ellis
Scene Craft UK Ltd
set design company
York
Advice in Scotland
Business Gateway in Lowlands
(0845 609 6611;
www.bgateway.com);
Highlands & Islands Enterprise
(01463 234171; www.hie.co.uk)
same as another name already
appearing on the register at
Companies House.
There are restrictions on the
use in a business or company
name of a number of ‘sensitive’
words and expressions — such
as ‘Royal’ or ‘Institute’. Further
details of what is allowed can be
found in the Companies House
booklets listed in Next steps
below.
You should check the
availability and suitability of
company names with Companies
House before completing the
company registration documents.
You can’t reserve intended
company names for your possible
future use.
When choosing a name, you
may want to consider whether
you will want to set up a website
using the same name.
If so, it’s a good idea to check
the name is available as a web
address (domain name) and
register it, so your customers
will be able to find your website
easily.
Nominet UK is the registry
for UK domain names and also
provides advice on registering
and maintaining your Internet
name (see Next steps below).

Next steps
● You can check your name isn’t
the same or similar to that of
another company or limited
liability partnership on the
Companies House website.
Contact
www.companieshouse.gov.uk/info
● Make sure your company
name doesn’t conflict with any
registered trademarks. Contact
the Patent Office Trade Mark
Database: www.patent.gov.uk
● You can check availability of
domain names at Nominet
(www.nic.uk) or NetNames
(www.netnames.co.uk)
● See Business Names And
Domain Names, page 40
● For more information on naming
your business, read: Company
Names (GBF2); Business Names
(GBF3). Contact Companies
House: 0870 33 33 636;
www.companieshouse.gov.uk
Franchises,
social enterprises,
co-operatives and
charities
Your new enterprise may
have different aims or ways of
running itself, such as those
featured below. But you still
need to establish it within a
conventional legal business
form, such as a partnership or
limited company, for instance
Buying a franchise allows you
to set up your business without
starting from scratch. You buy a
licence from an existing business
(the franchisor) to use their trade
name, business idea or products
and services.
This normally involves paying
an initial fee followed by an
ongoing management fee or
royalties on sales. In return
you get support and advice
from the franchisor.
Franchising has a number of
advantages and disadvantages
— a business adviser will be able
to tell you more and you should
get a solicitor to check any
franchise agreement.
Social enterprises are
businesses that aim to make a
profit to help them fulfil social
aims such as creating or saving
jobs, keeping money within
the local economy, providing
services to the local community
or training.
Social enterprises are
accountable to their members
and to the wider community for
their social, environmental and
economic impact.
Remember that a social
enterprise isn’t a ‘trading form’
in itself. If you’re interested in
setting up a social enterprise you
should ask your business adviser
which structure would be most
suitable.
Co-operatives are one form of
social enterprise. A workers’
co-operative is a business owned
and democratically controlled by
its employees.
The Community Interest
Forming a business
Company or CIC is a business
form designed to give social 
enterprises the flexibility of the
limited company form.
If you want to set up a charity,
you normally have to register
with the Charity Commission.
Charities benefit from certain
tax advantages but have a range
of restrictions placed on their
activities.
Charities can take a range of
business forms — you should
contact the Charity Commission
for further guidance (see Next
steps below).
Next steps
● You can get more information on
social enterprises, co-operatives
and franchises on the Business
Link website. Contact
www.businesslink.gov.uk/
startingup
● For more information on
community interest companies,
contact 029 2034 6228;
www.cicregulator.gov.uk
● The Charity Commission
can provide you with more
information on registering a
charity. Contact 0845 300 0218;
www.charity-commission.gov.uk
The No-Nonsense Guide
 Get your income tax and National Insurance arrangements right from the beginning and
that’s one of the major worries out of the way. And it’s not as complicated as you might think
Sorting out your tax
and National Insurance
10
Your employment
status
The first stage in getting
your tax right is defining your
employment status
When you run your own business,
the way you are taxed depends
partly on the trading form your
business takes and partly on the
way you run your business.
If you have set up as a sole
trader, or are a partner in a
partnership or a member of a
limited liability partnership, you
could be taxed either as self-
employed or as an employee,
depending on the way your
work is organised (see Next
steps below).
If you set up a limited
company, you will be a director
and therefore taxed as an
employee on your earnings from
that company — even if you
work on your own (see Next steps
below).
Next steps
● You must define your
employment status to make
sure you are correctly taxed
● If you are a sole trader, in a
partnership or a limited liability
partnership, see Employed Or
Self-Employed?, right
● If you are setting up a limited
company, see Tax For A Limited
Company, page 12
The No-Nonsense Guide
Employed or
self-employed?
Whether you are employed or
self-employed depends upon the
terms and conditions you work
under and the way in which you
organise your work
You are likely to be classed as
self-employed if you:
● are free to hire other people on
your own terms to do the work
you've taken on, and pay them
out of your own pocket
● risk your own money in the
business
● provide the main items of
equipment needed to do the
work
● are free to take on work at a
fixed price regardless of how
long it takes to complete
● have a lot of control over your
work (for example, over hours,
place of work, what you do and
how you do it)
● work regularly for a number of
different people
● have to correct unsatisfactory
work in your own time and at
your own expense
Bear in mind that because someone
is self-employed for one particular
task, it doesn’t necessarily mean
they will be classed in the same way
doing another.
The HM Revenue & Customs
leaflet Employed Or Self-Employed?
provides further guidance.
The HM Revenue & Customs
leaflet Are Your Workers Employed
Or Self-Employed? explains how
rules on employment status apply
to the construction sector.
Special rules may apply if
your work is arranged through
an agency or if it is arranged
through a limited company or
partnership to provide your
service or the services of others
to clients. These rules have
become commonly referred to
as IR35 (see Next steps below).
In these situations, you will
normally have to pay tax and
National Insurance contributions
as if you were an employee.
Next steps
● See Forming A Business, page 4
● See Tax For A Limited Company,
page 12
● See Working Out Tax And NI For
Employees, page 17
● See Special Tax Rules For The
Construction Industry, page 22
● For more information read
the HM Revenue & Customs
publications: Employed Or Self-
Employed? (IR56); Are Your
Workers Employed Or Self-
Employed? (IR148). Contact HM
Revenue & Customs:
0845 9000 404; www.hmrc.gov.uk
● Further information is available
on the HM Revenue & Customs
website. Contact
www.hmrc.gov.uk/
selfemployed/tmaemployed_or_
self-employed.shtml
● For further advice on IR35,
contact the HM Revenue
& Customs IR35 Contract Advice
Line: 0845 303 3535;
www.hmrc.gov.uk/ir35
 Sorting out your tax
and National Insurance

Check for changes in the law

Regulations, figures and sums

of money may have changed since
publication. Update check:
0845 600 9 006
www.businesslink.gov.uk/figures

Tax and National
Insurance for the
self-employed
If you are self-employed, you
must register as such within
three months of starting up
When you register, HM Revenue
& Customs will change your tax
}
have to fill in a tax return each
11
year and you will be taxed on your
business’ profits.
To work out your profit, you I would recommend anyone
take allowable expenses away
to go and see a qualified
from your revenue. There are
complex rules governing what
accountant in the early
you can claim as expenses (see stages of setting up a
Next steps below). business — it will make the
Income tax is charged on all paperwork much easier
profit above your personal income to handle
tax allowance. Your allowance

~
status to self-employed and make depends on your circumstances.
arrangements for you to pay Remember that the income tax
the correct National Insurance you pay is not based on the salary
contributions. However, if your you pay yourself. For example,
work comes from more than one if you make a £30,000 profit, the
source, it is worth remembering whole amount is treated as a
that you could be classed as taxable sum, subject to personal
an employee in one job — with and other tax allowances — even
your employer deducting tax and if you have only drawn £10,000
National Insurance — and self- as salary and have retained the
employed in another. other £20,000 in the business.
As someone classed as self- You also have to make flat-rate
employed you will be responsible National Insurance contributions
for paying your own personal tax throughout the year (Class 2
and National Insurance. You will contributions). You also pay
Graham Walker
National Insurance contributions (2006–07 tax year)
co-inventor
LitterBuggy
Class 2 contributions £2.10 a week York
Class 4 contributions 8% of your annual profit between £5,035
and £33,540 and 1% on profits above £33,540

Income tax (2006-07 tax year)

Basic personal allowance £5,035

Tax rates on income above personal allowance

Starting rate £0–£2,150 10%

Basic rate £2,151–£33,300 22%

Higher rate More than £33,300 40%

The No-Nonsense Guide


National Insurance contributions
12 based on your profits (Class 4
contributions) which are collected
with your tax.
Self-employed people
pay less National Insurance
than employees but receive
significantly fewer benefits.
Next steps
● If you are self-employed, you
must register with HM Revenue
& Customs. Contact the Helpline
for the Newly Self-Employed:
08459 15 45 15;
www.hmrc.gov.uk/startingup/
register.htm
● See Calculating Expenses Of The
Business, opposite
● See Capital Allowances For
Equipment And Premises,
opposite
● HM Revenue & Customs offers a
guide for people starting up:
Thinking of working for
yourself? (SE/1). Contact the HM
Revenue & Customs Helpline for
the Newly Self-Employed:
08459 15 45 15;
www.hmrc.gov.uk/startingup
Tax for a
limited company
If you set up a limited company
and work for it, the company
will pay corporation tax on its
business profits and you’ll be
taxed as an employee of the
company
The No-Nonsense Guide
You also need business advice
This guide covers regulations. You
should also read a guide to general
business advice — from market
research to writing a business plan
You will pay income tax and as a business expense when
employee’s Class 1 National calculating the profits.
Insurance contributions on your You will also be taxed on any
employment income from the return on your investment in the
company. This is called PAYE company or any dividends and
— Pay As You Earn. Income tax benefits you receive from the
is deducted from all earnings company, as well as on any loans
above your personal income the company may make to you.
tax allowance. Your allowance
depends on your circumstances. Next steps
Your business also has to
pay employer’s Class 1 National ● If you form a limited company,
Insurance contributions for you you must register your payroll
and any other employees. with HM Revenue & Customs,
Your company’s profits each even if you are the only person
year are liable for corporation on it. Contact the Helpline for
tax: the company’s profit is its New Employers: 0845 60 70 143;
sales income less its business www.hmrc.gov.uk/newemployers
expenses (see Calculating ● See Calculating Expenses Of The
Expenses Of The Business, Business, opposite
opposite). Companies have to ● See Capital Allowances For
calculate their own corporation Equipment And Premises, opposite
tax liability. And there are ● See Working Out Tax And NI For
specific rules on what can count Employees, page 17
National Insurance contributions (2006–07 tax year)
Class 1 contributions 11% of weekly earnings between £97 and £645
and 1% on earnings above £645*
*Lower rates apply if you belong to a
contracted-out occupational pension scheme
Employer’s contribution 12.8% of employee’s weekly earnings above
£97 a week
Income tax (2006-07 tax year)
Basic personal allowance £5,035
Tax rates on income above personal allowance
Starting rate £0–£2,150 10%
Basic rate £2,151–£33,300 22%
Higher rate More than £33,300 40%

}
We do our own payroll
using the tax and National
Insurance information
supplied by HM Revenue
& Customs. The tables are
straightforward — it's just a
question of being organised.
We do it on a Thursday
afternoon for Friday wages
~
James Marsh
Rookbeare Farm
ice-cream manufacturer
Devon
Calculating expenses
of the business
Your business will be taxed on
its profits: correctly working out
what your business has spent is
just as important as how much
money has come in
Strict rules govern what can and
cannot be counted as a business
expense when calculating profits.
Allowable expenses include:
the costs of any goods or
materials bought as stock and
then resold; rent and running
costs for premises; marketing
costs; costs of travel to see
customers; financing costs; and
general running expenses such
as postage and telephone. Costs
which are not allowed include:
personal expenses such as
travel to work; clothes or living
expenses; entertaining clients;
and fines such as parking tickets.
The cost of buying equipment
or premises (and any reduction
in value following the purchase)
is not allowed as a business
expense — these areas are
covered by the capital allowances
system (see Next steps below).
You need to keep records of all
income and expenditure in order
to fill in your tax return each year
and pay the correct tax.
Next steps
● See Capital Allowances For
Equipment And Premises, below
● See The Tax Return For
Sorting out your tax
and National Insurance
Individuals, page 16
13
● See The Tax Return For
Companies, page 17
● For more information read:
How To Calculate Your Taxable
Profits (IR222); Capital
Allowances (IR206). Contact HM
Revenue & Customs: 0845 9000
404; www.hmrc.gov.uk/leaflets
Capital allowances
for equipment and
premises
When working out your profits,
you can’t count as an expense
the costs of the purchase of
premises and equipment — or
their gradual reduction in value
through wear and tear. But you
can claim a capital allowance on
certain premises or equipment.
Deducting a proportion of these
costs from your business’
taxable profits over several
years will reduce your tax bill
Rates of capital allowances vary,
and sometimes work in slightly
different ways.
The main rate for equipment is
25 per cent. However, small and
medium-sized businesses can
claim a higher rate in the year
of purchase. This is usually 40
per cent, but for one year from
April 2006 the rate for small
businesses is 50 per cent.
So for an item costing £2,400,
a small business can deduct
£1,200 — 50 per cent of the
cost — from its taxable profits
The No-Nonsense Guide
 It worked for me
How I
tackled
keeping
the books
Former actor Siobhan Brough
co-owns Brighton-based
business-development
14 consultancy Brough Dann
Associates. Despite having
previous experience of
cataloguing expenses and
filling in tax returns, when
she started her business
she felt it best to use a
professional book-keeper
}My partner and I started our
business part-time, both
operating as sole traders under
the single banner of Brough
Dann Associates. Once we
were busy enough to leave our
salaried jobs we decided to
become a partnership.
When I was an actor I’d
filed my own tax return and
in the arts marketing job I
had before I’d dealt with petty
cash. This meant I was already
in the habit of writing down
every expense and I knew the
importance of doing the same
for our business. Still, we
felt it was a good idea to get
someone to do the books.
Our expenses are mainly
stationery and petrol costs, but
there are other things too. For
example, we recently bought
new laptops and software for
which we can claim capital
allowances. There’s also a
certain proportion of heating,
electricity and council tax costs
to claim because we work from
home.
The No-Nonsense Guide
I note absolutely everything
down — every stamp I’ve bought,
every few miles I’ve travelled in
the car, how much I’ve paid for
parking. It’s a bit like cleaning
your teeth when you’re little — at
first you wonder why you have to
do it, but then it becomes habit
and later you realise it’s actually
the best way to do things.
We sit down every month
with our receipts, invoices
and bank statements. The
book-keeper separates all
the receipts under different
expense headings, checks our
incomings and outgoings on our
bank statements and then files
everything electronically on an
Excel spreadsheet.
It means the business gets
a monthly and year-to-date
breakdown of income and
expenditure. It also means our
accountant has a fairly easy job
for our tax return at the end of
the year.
The cost of using our book-
keeper is tax deductible too, of
course.
Siobhan: keeping her expenses in
order
Brough Dann doesn’t
have any employees yet, but
occasionally we subcontract
people on a freelance basis. I
always check they’re dealing
with their own tax and national
insurance (NI), and I pay my
own NI monthly by direct debit.
There’s no two ways about
it, keeping everything in order
can be time consuming. But it’s
one of the main building blocks
of the business, and without
these blocks the whole thing
gets a bit shaky.
~
Brough Dann Associates
Brighton
Tel 01273 501537
www.broughdann.com

Advice in Scotland
Business Gateway in Lowlands
(0845 609 6611;
www.bgateway.com);
Highlands & Islands Enterprise
(01463 234171; www.hie.co.uk)
in the first year. The next year
the allowance reverts to 25 per
cent. This means £300 can be
deducted from profits before
tax: 25 per cent of £1,200, which
is the remaining value of the
item. The year after that, £225
can be deducted — 25 per cent
of the remaining value of £900.
In this way the allowance slowly
declines year by year.
The allowance for the purchase
of industrial buildings is 4 per
cent. You take this proportion of
the original cost of the buildings
from your profit before tax in both
the first year and in subsequent
years.
There are other special
schemes that increase the rate
of capital allowances in the year
in which equipment is purchased.
For example, there are capital
allowances of 100 per cent in
the year of purchase for a range
of environmentally-friendly
equipment.
Next steps
● For more information read:
How To Calculate Your Taxable
Profits (IR222); Capital
Allowances (IR206). Contact
HM Revenue & Customs:
0845 9000 404; www.hmrc.gov.uk/
sa/forms/content.htm
● For further information about
enhanced capital allowances
for environmentally-friendly
equipment, contact
www.eca.gov.uk
How capital gains tax
works
If you’re looking to create
and sell a business or use
the proceeds from the sale
of your business to fund your
retirement, you need to be
aware of capital gains tax (CGT).
And if you sell any assets you
may be required to pay CGT
You may have to pay capital
gains tax (CGT) if you sell — or
sometimes if you give away —
what HM Revenue & Customs
calls ‘assets’. An asset is
something you own, such as
shares, property or the goodwill
of a business.
If an item is worth more than
you paid for it when you come to
sell or ‘dispose’ of it, you may be
liable to pay CGT. The difference
between the item’s value when
you dispose of it and when you
acquired it (less certain kinds of
expenses allowed by HM Revenue
& Customs) is the capital gain.
This is what you may be taxed on.
You will be taxed personally
on any gains you make when you
sell your business. However, you
may qualify for reduced amounts
of CGT.
For example, if you have
held an asset used for business
purposes for at least a year,
the proportion of any gain you
are taxed on when you sell the
asset may be halved. It may fall
to a quarter after two years or
more — meaning a 40 per cent
Sorting out your tax
and National Insurance
taxpayer in effect pays a 10 per
15
cent rate of CGT. This is called
taper relief.
Individuals who make capital
gains can take account of any
allowable losses they make as
well as taper relief (see above)
and an annual amount that is
exempt from CGT (£8,800 in the
tax year 2006-07). If there are
still taxable gains after these
deductions, they will be taxed at
10 per cent until the gain added
to other taxable income reaches
the top of the person’s starting-
rate income tax band, then 20
per cent until the total of taxable
income and taxable gains reaches
the top of the basic income tax
band and 40 per cent on any
balance above that.
Remember you don’t normally
have to pay CGT on the sale of
your own home. And there is a
range of other exemptions and
reliefs.
Limited companies pay
corporation tax on any capital
gains, as they are treated as part
of the company’s taxable profit.
CGT can be complex. You
should take advice from an
accountant, particularly if your
company sells its business,
goodwill, property or shares in
other companies.
Next steps
● For more information read:
Capital Gains Tax — An
Introduction (CGT1). Contact
0845 9000 404;
www.hmrc.gov.uk/leaflets/
cgt1.htm
The No-Nonsense Guide

16
The tax return for
individuals
Both self-employed people and
directors of limited companies
must fill in a self assessment tax
return each year
HM Revenue & Customs should
send you a tax return in April that
is tailored to your own particular
circumstances.
You will need to complete all
the details of taxable income,
gains and tax allowances.
HM Revenue & Customs will
work out how much tax you have
to pay if you return the form by
September 30. Otherwise, you
must return the form by January
31, having worked out yourself
how much tax you owe.
HM Revenue & Customs will
also work out how much tax you
owe if you complete your return
online by January 31.
If you’re self-employed, you’ll
need to use the records you keep
while running your business to fill
in your tax return.
After your first year in
business, your tax will be due in
two equal instalments on January
31 (during the current year) and
July 31 (in the following tax year).
These initial amounts are based
on the previous year’s tax bill.
A balancing payment is due on
the following January 31, to adjust
for the difference between the
amounts paid and the tax due as
a result of the actual profits and
gains.
The No-Nonsense Guide
}
Protek-dor employs five
members of staff and finds
it easier to pay tax and NI
by bank transfer on a
monthly basis
~
Debbie Jones
Protek-dor Limited
lorry-cab security
equipment
Oxfordshire
If you’re a director of a
limited company, you need to
keep information on your pay,
tax, expenses and benefits in
kind (P60 and P11D forms, for
example) and records of any
dividends you have received (see
Next steps below).
As a company director, your
tax is due on January 31 following
the tax year. You will have to pay
any tax you owe after taking into
account the tax already deducted
under the PAYE system. If you
owe less than £2,000 and submit
your return by September 30,
this tax can probably be collected
under PAYE as well.
Next steps
● If you’re running a limited
company, you will be taxed as
an employee and need to set up
your own payroll, even if you are
the only employee.
See Working Out Tax And NI For
Employees, page 17;
See Statement of Employees’
Pay, Tax And National Insurance,
page 19;
See Employees’ Pay Records At
End Of Tax Year, page 20
● For more information read:
Self Assessment — Your Guide
(SA/BK8); Self Assessment
— A General Guide To Keeping
Records (SA/BK4). Contact
0845 9000 404;
www.hmrc.gov.uk/leaflets/sa.htm
● To file your self-assessment
income tax return online,
contact www.hmrc.gov.uk/online
 Sorting out your tax
and National Insurance

Check for changes in the law

Regulations, figures and sums

of money may have changed since
publication. Update check:
0845 600 9 006
www.businesslink.gov.uk/figures

Corporation tax (2006–07 financial year) 17

The tax return for
Taxable profits Tax rate
companies
£0–£300,000 19%

Your company is responsible £300,001–£1.5m Rate rises gradually from 19%–

for calculating and paying tax on
its profits
If your business is a limited
company or a limited liability
partnership registered with
Companies House, you must,
within 12 months of the end of
your first accounting period, let
HM Revenue & Customs know
that it is operating — unless HM
Revenue & Customs has already
been in touch with you.
Accounting periods are the
basis periods for corporation
tax. Your first accounting period
begins when your company or
limited liability partnership starts
operating. Accounting periods
don’t have to mirror the tax year,
but they must not be longer than
12 months.
You must keep detailed
records relating to all income and
expenses. And if you are a limited
company, you must ensure that
you run the correct Pay As You
Earn (PAYE) procedures for you
and any other employees.
Once you have registered
your limited company, it will be
responsible for working out and
paying any corporation tax due
within nine calendar months
and one day after the end of its
accounting period. You can be fined
for inadequate records or paying
late. You must keep company
records for at least six years.
More than £1.5m 30%
Shortly after the end of the
company’s accounting period,
you should receive a CT600 form,
which is the corporation tax
return, along with a Notice to Pay
from HM Revenue & Customs.
However, if you do not receive
them for any reason, it is still
your responsibility to pay the
tax and complete and send a
corporation tax return. You can
request a form CT600 from the
Corporation Tax Self Assessment
Orderline (see Next steps below).
Corporation tax bands are
set out in the table above. The
levels may be reduced for certain
companies, especially if there
are other companies under the
same control. For example, if you
own and run two companies, the
thresholds will be halved for each
company.
Next steps
● If you don’t receive a copy of
form CT600 automatically, you
must request one from your
local HM Revenue & Customs
office or the Corporation Tax
Self Assessment Orderline.
Contact 0845 3006 555,
www.hmrc.gov.uk/ctsa
30% (marginal relief)
● See Working Out Tax And NI For
Employees, below
● For more information read:
A General Guide To Corporation
Tax Self Assessment (CTSA/
BK4). Contact 0845 3006 555;
www.hmrc.gov.uk/ctsa/
guidance.htm
Working out tax and NI
for employees
If your business has employees,
you'll need to set up payroll
arrangements. You have to
work out the tax and National
Insurance contributions you owe
and pay them to HM Revenue
& Customs. The process can be
completed manually, or you can
file your forms and send your
payments electronically
Income tax is deducted from an
employee’s pay through the Pay
As You Earn system, PAYE.
You must register as an
employer with HM Revenue
& Customs. You will be sent a
PAYE reference number and a
New Employer’s Starter Pack. The

The No-Nonsense Guide

 pack comprises booklets and
18 a CD-ROM that contain all the
forms, tables and information
you need to operate your payroll
system and take you through
everything, step by step. It also
explains how to make your
returns online — there are
financial incentives for small
businesses that do this.
In the Starter Pack you’ll find
a form P11. You use this each
payday to record the income
tax and National Insurance due
from each employee and the
employer’s National Insurance
contributions you must pay.
You use the P11 as a working
sheet to list all wage payments to
employees.
The pack also contains a
booklet — Paying Someone for
the First Time — which explains
how to fill in a P11 and how to
use the tables to work out how
much tax and National Insurance
is due. The CD-ROM contains an
interactive learning package to help
newcomers to running a payroll.
You’ll need to find out the
employee’s National Insurance
number and their tax code before
you can fill in the form.
If they have worked before, ask
the employee for parts two and
three of the P45 form provided
by their previous employer. This
gives their National Insurance
number and tax code, as well as
details of their tax and pay to date
in the current tax year.
If the employee doesn’t have
a P45, ask for their National
Insurance number and get them
to fill in the top part of the P46
The No-Nonsense Guide
form from your New Employer’s
Starter Pack. Use the table in the
Paying Someone for the First Time
booklet to work out the tax code
to use from the information the
employee has provided.
Then call the HM Revenue
& Customs New Employer’s
Helpline, who will tell you
whether you need to send the
P46 to the tax office.
Once you’ve completed the
P11, you know how much net
pay goes to the employee — and
how much is due to HM Revenue
& Customs. Other deductions
such as pensions can also affect
the size of the pay packet.
If you’re asked to do so, you
have to subtract student loan
deductions from an employee’s
pay packet and pay them to HM
Revenue & Customs. Record
the payments deducted in the
relevant column of form P11. You
add the student loan deductions
to the income tax and National
Insurance that you are due to pay
to HM Revenue & Customs.
Employers were previously
responsible for paying working
tax credit (WTC) to employees
who are entitled to it. However,
this method of payment was
phased out on 31 March 2006
and WTC is now paid directly into
employees' bank accounts by the
government.
Next steps
● You must register as an
employer with the HM Revenue
& Customs New Employer’s
Helpline. They will also send
you the New Employer’s Starter
Pack. Contact 0845 60 70 143;
www.hmrc.gov.uk/employers
● For information on how
to pay employees’ tax and
National Insurance, see Paying
Employees’ Tax And NI, below
● For information on electronic
filing read: Do It Online. Contact
HM Revenue & Customs:
0845 60 70 143;
www.hmrc.gov.uk/online
● For more information on your
personal tax and National
Insurance: if you are self-
employed, see Tax And NI For
The Self-Employed, page 11;
if your business is a limited
company, see Tax For A Limited
Company, page 12
● Employed Or Self-Employed?
A Guide For Tax And National
Insurance (IR56) offers
important information on your
employment status. Contact
www.hmrc.gov.uk
Paying employees’
tax and NI
Tax and National Insurance
contributions are paid to HM
Revenue & Customs every month
unless your business collects
less than £1,500 a month, when
it can be paid quarterly
Keep records of your total
monthly or quarterly payments
to HM Revenue & Customs on
form P32 available in the New
Employer’s Starter Pack.

}
As a limited company I have
to file accounts at the end of
the year and pay corporation
tax, which is a percentage of
my shop’s net profits. Using
an accountant for this saves
us a lot of time
~
Colleen Slater,
Pyramid gift shop
Ziggurat Limited
Brighton
Tax and National Insurance
contributions must be paid to
HM Revenue & Customs by the
19th of each month if you pay by
cheque, or by the 22nd if you pay
electronically or through your
bank. If you collect less than
£1,500 a month in income tax,
National Insurance and student
loan repayments, you can pay
quarterly: by January 19, April
19, July 19 and October 19 if
you pay by cheque, or by the
22nd of those months if you pay
electronically or through your
bank.
You will automatically receive
a payment booklet from your HM
Revenue & Customs Accounts
Office to send with your payments
if you pay by post. Electronic
payment methods include
BACS direct credit, your bank’s
telephone or Internet banking,
Girobank Billpay or CHAPS.
Next steps
● HM Revenue & Customs can
provide detailed information
on how to pay tax and National
Insurance. Contact
www.hmrc.gov.uk/howtopay
● The New Employer’s Starter
Pack offers more guidance on
the procedures. Contact the
HM Revenue & Customs
New Employer’s Helpline:
0845 60 70 143
● Form P32, the Employer's
Payment Record, is included
in the New Employer's Starter
Pack and can be ordered
from the HM Revenue &
Customs Employer's Orderline.
Sorting out your tax
and National Insurance
Check for changes in the law
Regulations, figures and sums
of money may have changed since
publication. Update check:
0845 600 9 006
www.businesslink.gov.uk/figures
Contact 0845 7 646 646;
www.hmrc.gov.uk/employers 19
Statement of
employees' pay,
tax and National
Insurance
Employees have to be given
a payslip or statement when
they are paid. This sets out
their gross and net pay and
the amounts of tax, National
Insurance and other deductions
The itemised payslip or statement
must show:
● their gross wages or salary
before you make any
deductions
● details of deductions from
their pay which vary from one
period to the next (income
tax and National Insurance
contributions, for example)
● details of any fixed deductions
which stay the same every pay
period (such as trade union
subscriptions)
● their net wages or salary
after tax
● a breakdown of payments if
parts of the salary are paid in
different ways
Instead of itemising every fixed
deduction in each pay statement,
you can include them all on
an annually updated standing
statement. If there are any
changes which affect the fixed
deductions, you must inform the
The No-Nonsense Guide

employee in writing or give them
20 a new standing statement.
Next steps
● For more information read:
Pay Statements: What They Must
Itemise (URN 06/538). Contact
www.dti.gov.uk/publications
Employees’ pay
records at the end of
the tax year
There are other forms that
have to be sent to HM Revenue
& Customs — and given out to
your staff — at the end of every
tax year
The tax year runs from April 6
to April 5 and you can get all the
necessary year-end forms from
the HM Revenue & Customs
Employer’s Orderline. You return
them to your tax office or file
online at www.hmrc.gov.uk/online
Don’t forget to keep copies for
your own records.
For each employee for whom
you have prepared a P11 form
(see Working Out Tax And NI For
Employees, page 17), you will
need to fill in form P14. This is
a three-part form: the top two
copies must reach HM Revenue
& Customs by May 19 each year.
The bottom copy is a P60, which
details the employee’s total pay
and tax and National Insurance
contributions. You must give this
bottom copy to the employee by
The No-Nonsense Guide
}
When I took on staff I
decided to outsource my
payroll to an accountant.
I find it is cost effective
and it gives me one less
thing to worry about
~
Avi Lasarow
DNA Bioscience
genetic testing company
London
Check for changes in the law
Regulations, figures and sums
of money may have changed since
publication. Update check:
0845 600 9 006
www.businesslink.gov.uk/figures
May 31 each year.
Along with the P14 form, you
have to complete a P35, which
summarises all the P14s you
have prepared. You will be sent
a P35 towards the end of the tax
year and you must complete and
return the P35 with your P14s.
Forms P11D and P11D(b) need
to be filled in for all directors and
every employee who earns £8,500
or more a year and has been
paid expenses or benefits that
are taxable. It lists the taxable
expenses and benefits provided
to the employee during the tax
year. You must send the form to
HM Revenue & Customs and give
a copy to the employee by July 6
each year.
A P9D form must be sent
to HM Revenue & Customs for
each employee earning less than
£8,500 a year who has been paid
taxable expenses or benefits. You
must submit the form and give
a copy to the employee by July 6
each year.
Next steps
● The HM Revenue & Customs
Employer’s Orderline provides
all relevant forms and guides.
Contact 0845 7 646 646;
www.hmrc.gov.uk/employers
● For more guidance on
completing the forms, check the
booklets and CD-ROM contained
in the New Employer’s Starter
Pack. Contact 0845 60 70 143;
www.hmrc.gov.uk/employers

Tax forms when an
employee leaves or dies
In both cases, you complete a
P45 form
When an employee leaves, fill in
a P45 with details of their gross
pay, tax code and tax deducted
in the year to the date of leaving.
You then send one part of the
form to HM Revenue & Customs
and give the other three parts to
the employee.
If an employee dies, complete
a P45 and send all four parts of it
to your HM Revenue & Customs
office.
Next steps
● For more information read:
Details Of Employee Leaving
Work (Form P45). Contact
0845 7 646 646;
www.hmrc.gov.uk/forms/p45.pdf
Business vehicles
and tax
The tax you pay related to
vehicles used for your business
depends on a variety of
elements, including the legal
form your business takes and
your employment status
Every vehicle is subject to a
payment of vehicle excise duty
unless it was manufactured more
than 30 years ago. The rates vary,
depending on the type of vehicle
(for example, cars, vans or heavy-
goods vehicles). Check with the
Driver and Vehicle Licensing
Agency (see Next steps below).
Personal taxation on use of
cars for business works in two
ways: one for the self-employed
and another for employees,
including directors of limited
companies (see Next steps
below).
If you are self-employed,
you’ve got two choices.
You can claim the actual
expenses of using a vehicle for
business when you’re working
out your profits. If you take this
option, you can also claim capital
allowances if you own the vehicle
(see Next steps below).
Alternatively, you can use the
rates from the Approved Mileage
Allowance Payments (AMAP)
scheme to calculate your vehicle
expenses using a fixed rate
for each business mile. Rates
depend on the level of mileage
— full details are on the HM
Revenue & Customs website.
Under this system, you can’t
claim for any interest you pay
on a loan to buy the vehicle or
capital allowances.
In both cases you must keep
adequate records to back up the
figures on your tax return.
If you are employed, the rules
are different. If the business
makes a car available to an
employee for their private as
well as business use (a ‘company
car’), the employee will normally
be taxed on it as a benefit.
Sorting out your tax
and National Insurance
Remember: you’ll be treated as
21
an employee for tax purposes
if your business is a limited
company.
Employees won't be taxed
on the use of the vehicle if —
including the value of the vehicle
benefit — they earn less than
£8,500 in a tax year or if they use
a pool car of the business. This is
a vehicle routinely used by more
than one employee and not kept
at an employee's home when not
being used for business nor used
privately in any other way.
Otherwise, employees are
taxed on the benefit, the charge
being a percentage of the
vehicle’s list price. For almost
all cars, the tax depends on the
level of carbon dioxide emissions
and the fuel it uses. There is
generally a lower tax charge on
more energy-efficient cars.
If employees receive any fuel
for private use which they don’t
pay for themselves, they will also
be taxed on this benefit.
If employees use their own
cars for business purposes, they
can be reimbursed under the
Approved Mileage Allowance
Payments (AMAP) scheme at a
set rate per business mile. The
rate depends on the number of
business miles they travel. If you
pay the employee no more than
the maximum calculated using
the appropriate rate, you can
make the payment free of tax and
National Insurance.
Businesses that make vehicles
available to employees for their
private use must report the
taxable value of the benefit to
The No-Nonsense Guide
 HM Revenue & Customs on
22 form P11D annually. Employers
must also pay Class 1A National
Insurance on the taxable value
of cars and fuel made available
to employees for their private
use. There are also VAT rules on
business vehicles (see Next steps
below).
If your business buys a car,
it can claim a capital allowance
(see Next steps below). If your
business leases vehicles, the cost
can be deducted from taxable
profits.
The rules are complex. You
should check the position with
HM Revenue & Customs or
consult your accountant.
Next steps
● See VAT On Business Vehicles,
page 29
● See Capital Allowances For
Equipment And Premises,
page 13
● See Employed Or
Self-Employed?, page 10
● You must arrange your vehicle
excise duty on any business
vehicles. Contact the Driving
and Vehicle Licensing Agency:
0870 240 0010; www.dvla.gov.uk
● HM Revenue & Customs can
give you further information
on business vehicles and tax.
Contact the New Employer’s
Helpline: 0845 60 70 143.
If you’re self-employed,
contact the Self Assessment
Helpline: 0845 9000 444.
Further information about tax
on business vehicles is
available on the HM Revenue &
The No-Nonsense Guide
Customs website:
www.hmrc.gov.uk/cars
● For more information read:
Using Your Own Vehicle For
Work — Guidance For
Employees. Contact the
HM Revenue & Customs
Employer’s Orderline: 0845 7
646 646;
www.hmrc.gov.uk/mileage/
employee-factsheet.htm
Special tax rules
for the construction
industry
There are different rules for
the payment of income tax and
National Insurance if you are in
the construction industry. These
rules are called the Construction
Industry Scheme
In the construction industry,
businesses fall into two main
categories: contractors and
subcontractors (though it is
possible for a business to be
both).
Broadly, a contractor is any
person, business or public body
who pays others for work carried
out within the Construction
Industry Scheme.
A subcontractor is any person
or business which has agreed to
carry out construction operations
for another person, business or
public body which is a contractor.
Subcontractors must hold
either a registration card
(CIS4) or a Subcontractor’s Tax
Certificate (CIS5 or CIS6), all of
which must be obtained from HM
Revenue & Customs.
Contractors must make a
deduction of 18 per cent from
the pay of subcontractors with
a registration card and forward
the deductions to HM Revenue
& Customs. The deductions
are then held against account
of the final amount of tax and
National Insurance owed by the
subcontractor.
Subcontractors with a
Subcontractor’s Tax Certificate
should be paid gross, which
means no deductions are made.
A new Construction Industry
Scheme will be introduced
in April 2007 (see Next steps
below).
Next steps
● You can get further details
on the Construction Industry
Scheme from HM Revenue
& Customs. Contact 0845 7 335
588 for contractors, 0845 300
0581 for subcontractors;
www.hmrc.gov.uk/cis
● For more information read:
Construction Industry Scheme
(IR14/15). Contact
www.hmrc.gov.uk/leaflets/c7.htm
● Details of the new Construction
Industry Scheme, effective
from April 2007, are available
on the HM Revenue & Customs
website:
www.hmrc.gov.uk/cis/reform.htm
 Sorting out your tax
and National Insurance

Check for changes in the law

Regulations, figures and sums

of money may have changed since
publication. Update check:
0845 600 9 006
www.businesslink.gov.uk/figures

}
I do about 5,000 miles a year
in my own car for business.
It's easier for me to charge
the mileage allowance to
expenses than keep a record
of all my motoring expenses
and work out the business-
use proportion
Your business rates
When you start your business,
you will probably have to pay
business rates for your premises
— sometimes even if you work
from home
Usually the occupier of a non-
domestic property has to pay
business rates. This can be the
Next steps
23
● You must notify the local
council covering your intended
workplace that you are going to
start a business and register for
business rates if appropriate
● For details of your local branch
of the Valuation Office Agency,
contact 020 7506 1700;
www.voa.gov.uk
● For more information on
business rates and the

~
owner-occupier or a leaseholder. Small Business Rate Relief
Non-domestic properties are scheme visit
defined as properties such as www.mybusinessrates.gov.uk
shops, offices, warehouses,
factories, nursing homes,
childcare nurseries, hotels,
restaurants and guesthouses, for
example. Agricultural land and
buildings, fish farms and some
property used for disabled people
are among a small number of
properties that are exempt.
When you start up, you should
notify the local council that
covers the area in which you are
Eamonn Sweeney running your business so it can
4 & Twenty Bakery charge you the correct rate. If
your rateable value is less than
London
£15,000 the Small Business Rate
Relief scheme may reduce your
liability by up to 50 per cent.
If you work at home, your
council may charge business
rates for the part of the property
you use for work. You will pay
council tax in the usual way for
the remainder of the property. It
depends on the circumstances of
each case. Check with the local
branch of the Valuation Office
Agency for advice.

The No-Nonsense Guide

 If your business supplies goods or services exceeding £61,000 each year, you must register for
value added tax (VAT). You’ll have to charge VAT on your sales and pay it on most purchases.
But don’t be daunted — a lot of the paperwork is the kind of thing a well-run business will be
doing in any case
What VAT will mean
for you
24
What is VAT?
Value added tax (VAT) is a tax
on sales of goods and services.
It is not a tax on profits.
Businesses must register
for VAT if they exceed the
registration threshold
Registration for VAT is
compulsory for most businesses
that supply goods and services
amounting to more than £61,000
a year in any 12-month period
(this threshold is valid for the
2006-07 tax year. Check
www.businesslink.gov.uk/figures for
any changes). You must register
within 30 days of reaching the
threshold, or immediately if you
expect to exceed the threshold in
the next 30 days.
Registered businesses collect
VAT on the Government’s behalf.
All businesses pay VAT on most
purchases. This is called input tax.
Registered businesses charge
VAT on the goods and services
they sell. This is output tax.
If a VAT-registered business
receives more output tax from
sales than it pays in input tax
on purchases, it must pay the
difference to HM Revenue &
Customs at fixed intervals (see
Next steps below).
If more input tax has been
paid than output tax charged,
HM Revenue & Customs will
refund the difference to your
business.
Businesses with a turnover
below the £61,000 threshold can
The No-Nonsense Guide
register voluntarily. Sometimes
there can be a business
advantage in doing this. For
example, if your business pays a
higher-than-average amount of
input tax and charges a lower-
than-average amount of output
tax, it could be worth registering
to reclaim the input tax you
have paid.
Next steps
● See Keeping VAT Records,
opposite
● For more information read:
Should I Be Registered For
VAT? (Notice 700/1). Contact
HM Revenue & Customs
National Advice Service: 0845
010 9000; www.hmrc.gov.uk
● To register for VAT use Form VAT
1 from HM Revenue & Customs.
Contact 0845 010 9000;
www.hmrc.gov.uk
● For further information on
registering voluntarily contact
HM Revenue & Customs on 0845
010 9000 — or seek advice from
your accountant
What VAT rate will I
have to charge?
The rate of VAT varies according
to the type of product or service
you offer
Goods and services (supplies) are
divided into four categories for
VAT purposes. They can be:
● taxed at a standard rate
(currently 17.5 per cent)
● taxed at a reduced rate
(currently 5 per cent)
● taxed at a zero rate
● exempt from VAT
All goods and services that are
not exempt are referred to by
HM Revenue & Customs as
‘taxable supplies’.
Most VAT-registered
businesses must add the
standard rate of VAT to the value
of their products and services
when they are sold.
The reduced rate must be
charged on: domestic fuel or
power; installation of energy-
saving materials; grant-funded
installation of heating equipment,
security goods or connection
of gas supply; renovation
and alteration of dwellings;
residential conversions; women’s
sanitary products; children’s
car seats.
There are also specific rules
on products and services that are
zero-rated. In these areas, VAT is
applied at 0 per cent. Businesses
that offer zero-rated products
or services can still reclaim
the input tax they have paid on
purchases. Zero-rated products
include: most food (but not meals
in restaurants or cafes and hot
takeaway food and drink); books;
newspapers; young children’s
clothing and shoes; exported
goods; most public transport
services.
Exempt products and services
include: insurance; providing
credit; certain types of education
and training; certain services

from doctors and dentists;
selling, leasing or letting land
and buildings (but not garages,
parking spaces or hotel and
holiday accommodation).
Any business which offers
some goods or services that are
subject to VAT and some that are
exempt have ‘partial exemption’.
This means it can only reclaim
input tax as a proportion of output
tax charged. If your business
will be dealing exclusively with
exempt products or services, you
will not be required to register for
VAT.
Next steps
● Check if your products or
services are standard-rated,
reduced-rated, zero-rated or
exempt. Contact HM Revenue
& Customs National Advice
Service: 0845 010 9000;
www.hmrc.gov.uk
● For more information read:
The VAT Guide (Notice 700);
Partial Exemption (Notice 706).
Contact HM Revenue & Customs
National Advice Service: 0845
010 9000; www.hmrc.gov.uk
Keeping VAT records
Being registered for VAT means
that you must keep full and
accurate records
You must start keeping records
and charging VAT to customers
from the date you know you have
}
We registered for VAT from
the start because I knew we
would have had to within
a month anyway. VAT and
taxation scared me, but I
decided it was easier to sort
it out straight away
~
Don Haddaway
Artisiam Limited
telecommunications
consultancy
Oundle, Northants
What VAT will mean
for you
Check for changes in the law
Regulations, figures and sums
of money may have changed since
publication. Update check:
0845 600 9 006
www.businesslink.gov.uk/figures
to be VAT-registered. Each invoice
or receipt must show clearly the 25
rate and amount of VAT charged
and the VAT number given to
your business by HM Revenue
& Customs when you registered.
You must also ensure your
VAT-registered suppliers do the
same on their invoices to you so
you have evidence that you are
entitled to reclaim the input tax
you’ve paid.
You must keep copies of all
invoices or receipts and a note
of all the VAT you have charged
and paid.
You have to fill in a VAT return
— showing how much VAT you
have received and paid — and
forward payment of the balance
to HM Revenue & Customs. You
must complete a VAT return for
each accounting period. This is
usually every three months, but if
you expect the input tax you pay to
be greater than the output tax you
charge, you can make monthly
returns. You will be sent a VAT
return form to fill in before each
payment is due. You must return
it to HM Revenue & Customs no
later than one month after the
accounting period.
There is no set way to keep
records, but they must be easy
for HM Revenue & Customs to
inspect whenever it asks to do so.
Full records must also be kept for
a minimum of six years.
Next steps
● For more information read:
Keeping Records And Accounts
(Notice 700/21). Contact HM
The No-Nonsense Guide
 It worked for me
How I got
to grips
with my
VAT returns
Anita McCullough opened
her shop, Anita’s Fabulous
Flowers, in central Belfast
26 in autumn 2000. She
registered the business for
VAT before she had turned
over a single penny
}I’d worked in different florists
over the years but before I had
my own shop I’d never had
to do a VAT return. So what I
actually did when I first opened
was be VAT-registered from
the start.
That was so I could get to
grips with the VAT system
when the business was in a
quiet phase. I wasn’t worried
about charging VAT on my
sales because most of my
competition were
VAT-registered too.
It also helped when dealing
with companies and larger
organisations. Sometimes
if you’re not VAT-registered
you’re not taken that seriously
by them.
I did go on a short course
which went into some detail
on VAT when I started my
business, but my accountant
still talked me through my
first returns. It does feel a bit
daunting at first but actually
it’s pretty straightforward if
you’re doing your book-keeping
anyhow.
The No-Nonsense Guide
I do my books at the end of
every quarter. I go through all
my cheque books, receipts and
invoices. All my flowers and
everything I buy has VAT included
in the price so I work out the VAT
on the gross amount that I’ve
spent and do the same for sales
in the shop. I add it all up and
then balance the two together
to work out what, in most cases,
I owe.
Though actually, after my first
return, HM Revenue & Customs
gave me money because I’d spent
out on shelves and flooring and
all those other things you need
when you start off.
Now my turnover is such that
I’d have to be VAT-registered
anyway, but I’m pleased I started
earlier than I had to. If I hadn’t
I wouldn’t have been able to
claim my rebate on the fixtures
and fittings. And I have a good
understanding of how it all works
now anyhow.
I do my book-keeping every
quarter and it takes me eight
or so hours. But that’s making
a note of everything, not just
Aaran McCracken/UNP
Blossoming: Anita took the VAT
route from the start
working out VAT. I find it’s
easier to do it together and not
have two separate sets of books.
HM Revenue & Customs
sends out VAT guidelines and
there’s a VAT helpdesk number
you can ring.
The important thing is to
adopt a methodical approach,
double-check all the figures
and hold on to your workings
and calculations — they’re
always helpful for the next
quarter. If you get too het up
about these things it could
really get to you. I’ve found that
so long as you keep a record of
everything you do everything is
usually okay.
~
Anita’s Fabulous Flowers
Belfast
Tel 02890 650500

You also need business advice
This guide covers regulations. You
should also read a guide to general
business advice — from market
research to writing a business plan
Revenue & Customs National
Advice Service: 0845 010 9000;
www.hmrc.gov.uk
Accounting methods
for VAT
There are a number of methods
you can use to account correctly
for VAT. Choose the one that best
suits your business
Unless you arrange otherwise
with HM Revenue & Customs,
your output tax must be
accounted for in the next VAT
return period in which you
charge or invoice your customer,
regardless of whether you have
received payment. Your input tax
may be reclaimed if you have a
valid VAT invoice or receipt in the
VAT return period in which you
made the purchase, even though
you may not have paid your
supplier.
Other accounting schemes you
may be able to use are:
● cash accounting
● the flat-rate scheme for small
businesses
● specific retail schemes
● annual accounting
If the proportion of your turnover
subject to VAT does not exceed
£660,000 a year, your business
can use the cash accounting
scheme. This may be useful if
your customers are slow payers.
You only have to record your
output tax on your VAT return
after your customer has paid
you and your input tax is only
entered on your return when
you have paid your supplier. You
can change to this system at
the beginning of any tax period.
However, you must be careful
to separate any output tax or
input tax dealt with under your
previous system. You don’t need
permission from HM Revenue
& Customs to use this scheme
but there are certain conditions
you must meet, set out in Notice
731 (see Next steps below).
The flat-rate scheme for small
businesses is designed to reduce
the time you spend accounting
for VAT. It allows you to calculate
your VAT payment as a fixed
percentage of your turnover.
The percentage depends on
the type of business you are in.
Businesses in the first year of
VAT registration qualify for a one
per cent reduction.
To be eligible for the flat-rate
scheme, the proportion of your
annual turnover subject to VAT
must not exceed £150,000 and
your total turnover must not
exceed £187,500. You must apply
by filling in Form VAT 600 (FRS). If
you use this scheme, you will not
be able to reclaim any input tax
as it is already allowed for as part
of the percentage calculation.
A selection of specialist
schemes are available to retailers
who would otherwise find it
impossible or costly to comply
with standard VAT accounting
rules. Specialist advice is
available from HM Revenue
& Customs or your accountant.
What VAT will mean
for you
The annual accounting system
requires one VAT return to be 27
filed each year. You can register
for this scheme if your annual
turnover subject to VAT is not
more than £1,350,000.
Under the annual accounting
system, VAT payments based on
an estimate are usually made nine
times each year, with a balancing
payment due when you submit
your return. By allowing you to
pay a set amount each month,
the scheme can help you manage
your cashflow with more certainty
— and you have two months to
submit your return rather than
one. Annual accounting can be
used at the same time as the flat-
rate scheme.
Next steps
● For more information read:
Cash Accounting (Notice 731);
Flat Rate Scheme For Small
Businesses (Notice 733); Retail
Schemes (Notice 727); Annual
Accounting (Notice 732). Contact
HM Revenue & Customs
National Advice Service: 0845
010 9000; www.hmrc.gov.uk
● HM Revenue & Customs will
complete your application for
the flat-rate scheme on your
behalf. Contact 0845 010 9000
● Use an online ready reckoner to
calculate flat-rate VAT payments.
Contact www.hmrc.gov.uk
The No-Nonsense Guide
 Advice in Scotland
Business Gateway in Lowlands
(0845 609 6611;
www.bgateway.com);
Highlands & Islands Enterprise
(01463 234171; www.hie.co.uk)
28
VAT on imports
If your business imports goods,
there are a number of important
VAT rules you’ll need to consider.
And in some cases, you may also
have to pay import duty
The regulations that govern
VAT on imports into the UK are
complex and businesses should
seek advice from HM Revenue
& Customs. In general terms, VAT
is payable on all imports at the
same rate that would apply to the
product or service if supplied in
the UK.
It isn’t necessary to register for
VAT to import goods — but you
won’t be able to claim back any
VAT you pay if you don’t.
You must enter on your
VAT return details of VAT on
goods acquired from within
the European Union (EU). This
is known as acquisition tax.
However, you are entitled to
reclaim input tax on the goods as
if they were supplied in the UK
subject to the normal rules.
If you have a high level of
import trade with the EU, you
may have to submit more detailed
declarations, known as Intrastat
Supplementary Declarations.
For goods imported from
outside the EU, import VAT
and duty must be paid before
the goods are released by
HM Revenue & Customs.
Duty is an additional tax, based
on the value of imported goods.
Duty varies according to type of
The No-Nonsense Guide
product and country of origin.
In some cases no duty may be
payable. HM Revenue & Customs
can advise you on the rate of duty
which applies to a product.
Duty cannot generally be
reclaimed by VAT-registered
businesses, except where goods
have been imported under Inward
Processing Relief (see below).
There is no duty on goods which
originate from an EU country
or which have already been
imported with HM Revenue
& Customs’ charges paid.
For example, when goods are
supplied from the US to Belgium,
duty and other taxes are paid
in Belgium. Once in the EU, the
goods are in free circulation.
If they later enter the UK, no
customs charges are payable.
When importing goods from
outside the EU, you can store
them in an approved HM Revenue
& Customs warehouse if
you don’t intend to sell them
immediately. VAT and import duty
become payable when the goods
leave the warehouse.
If you intend to re-export the
goods after processing them, you
can apply for Inward Processing
Relief. VAT and duty only become
payable if you sell the goods in
the UK or fail to comply with the
scheme’s conditions.
If you import regularly, you
can operate a deferment account,
settling your VAT and duty on a
monthly basis. You may need a
bank guarantee for this.
Next steps
● Further guidance, including
rates of duty on commonly
imported goods, are available
from HM Revenue & Customs.
Contact 0845 010 9000;
www.hmrc.gov.uk
● For more information read:
A Brief Guide To Import
Procedures (Notice 501);
Deferring Duty, VAT And Other
Charges (Notice 101). Contact
HM Revenue & Customs
National Advice Service: 0845
010 9000; www.hmrc.gov.uk
● For more information about
Intrastat contact
www.uktradeinfo.com
VAT on exports
The value of any exports you
make — whether to countries
within or outside the EU
— must be entered on your VAT
return. In many cases these
transactions will be zero-rated
for VAT
Businesses in the UK that
sell to VAT-registered
businesses in other parts of
the EU must submit details of
the transactions to HM Revenue
& Customs.
If you have a high level of
export trade with the EU, you
may have to submit more
detailed declarations, known
as Intrastat Supplementary
Declarations.

}
The business became VAT-
registered after about a
year. At first it was a bit
daunting, but now I know
what I am doing it is quite
straightforward. I use an
accountant for the yearly
VAT returns and do my own
quarterly ones
~
Victoria Tringham
Pomelo
flip-flop and holiday
accessory designer
Newport
If you export goods to a
customer outside the EU and are
VAT-registered, the goods can be
zero-rated. The supply of some
services to overseas customers is
also zero-rated, but many attract
standard-rate VAT.
If you are VAT-registered
and supply goods that are sent
from the UK to a VAT-registered
customer in another part of the
EU, the goods can be zero-rated.
Complex rules surround exports
and VAT. Check with HM Revenue
& Customs for advice.
Next steps
● For more information read:
VAT — Exports Of Goods From
The United Kingdom (Notice
703); The Single Market (Notice
725); Place of Supply of Services
(Notice 741). Contact HM
Revenue & Customs National
Advice Service: 0845 010 9000;
www.hmrc.gov.uk
● For more information about
Intrastat contact
www.uktradeinfo.com
VAT on business
vehicles
There are special rules for VAT
on business vehicles — and the
fuel used in them
You can’t normally reclaim the
input tax you have to pay on a
new motor car. However, VAT-
registered businesses can claim
What VAT will mean
for you
it back if they can show the car
is used 100 per cent for business 29
purposes (a pool car kept on site,
for instance). You must charge
output tax if the car is sold later.
VAT incurred on the purchase
of a commercial vehicle (a van,
lorry or tractor, for example) can
be reclaimed in full subject to the
normal rules.
If the business pays for both
private and business fuel, a fixed
VAT charge is applicable based
on the size of the vehicle (this is
called the fuel scale charge). This
allows the business to reclaim
VAT on both the business and
private elements of the fuel.
If the business does not pay
for private mileage, a scale
charge does not apply and VAT
may be reclaimed on fuel bought
for business provided you keep
a detailed record of business
mileage.
If you lease a car for business
purposes, VAT may be reclaimed
on 50 per cent of the lease charge.
Next steps
● See Business Vehicles And Tax,
page 21
● For more information read:
Motoring Expenses (Notice
700/64). Contact HM Revenue
& Customs National Advice
Service: 0845 010 9000;
www.hmrc.gov.uk
The No-Nonsense Guide
 All you need to know about the rules for business premises, using your home as a workplace
and the health and safety measures that you’ll have to adopt once your business is operational
Premises and
health and safety
30
Planning consent for
businesses
If you want to change the
use of premises or extend a
building, you may need planning
permission from your local
authority. And any significant
building work must comply with
building regulations
Planning permission and building
regulations are managed by
your local authority. Special
considerations apply for people
working from home (see below).
You may require planning
permission to change the way
premises are used — from a shop
to offices, for example. Check
with your local authority whether
you’ll need permission for your
intended use.
In general, any building
work which significantly alters
the external appearance of a
building, such as an extension,
requires planning permission.
Most significant building work,
such as removing internal walls
or adding extensions, must
comply with building regulations,
regardless of whether planning
permission is needed.
If your building is listed
as being of architectural or
historical interest, you may need
to apply to the local authority
for listed building consent as
well, even for minor changes to
décor. Unauthorised alterations
to a listed building are a criminal
offence.
The No-Nonsense Guide
It is advisable to check if any
of these requirements will affect
you before negotiating a lease or
buying a property.
Next steps
● See Using Your Home As Your
Workplace, below
● See Ensuring Easy Access For
Disabled People, page 32
● Your local authority can advise
on planning permission and
building regulations
● More information is available
on the Planning Portal. Contact
www.planningportal.gov.uk
● Commercial leases often building is significantly changed
carry long-term commitments.
To ensure a lease that suits
your business, read: Code
Of Practice For Commercial
Leases In England And Wales
(recommendations for landlords
and tenants when negotiating
leases for business premises).
Contact Royal Institution of
Chartered Surveyors: 0870 333 1600; residence?
www.commercialleasecodeew.co.uk
Using your home as
your workplace
There are some special rules
for people who use their home
as a workplace
Mortgage or tenancy agreements
may prevent you from running a
business from your home. Check
with your lender or landlord
before you start.
You should also check with
your insurance provider to make
sure you are adequately covered
for running a business from your
home. You may need to take out
new policies to make sure your
home is protected.
You have health and safety
responsibilities if you work at
home and you must carry out a
risk assessment (see Next Steps
below). As part of this process,
you must consider the health and
safety of visitors and other people
in your household.
If running your business
from home means the use of the
or has an impact on the
surrounding area, you might
need to apply for planning
permission. For example, your
business might create additional
traffic. The key questions you
need to answer are:
● will your home no longer
be used mainly as a private
● will your business result in a
marked rise in traffic or people
calling or involve any unusual
activities in a residential area?
● will your business disturb your
neighbours at unreasonable
hours or create other nuisances,
such as noise or smells?
If the answer is yes to any of
these questions, you will have
to apply for planning permission
from your local authority.
There are also tax
considerations for people who
work at home. If you have set
aside a room to work in and it

has no domestic purpose, you
may be liable for capital gains
tax if the property is sold. Your
business will be able to claim
tax relief on domestic bills for
the areas of the house used for
the business.
Additionally, your council may
charge business rates for the
part of the property you use for
work. You will pay council tax for
the remainder of the property. It
depends on the circumstances of
each case. Check with your local
branch of the Valuation Office
Agency for advice.
Next steps
● You must check to see if you
require planning permission and
to make sure you are complying
with building regulations. Your
local council can advise on
planning permission matters
● You must check with your local
branch of the Valuation Office
Agency to see if you will be
charged business rates. Contact
www.voa.gov.uk
● You should check with your
mortgage lender, landlord Your premises must meet
and/or freeholder to see if there
are any reasons why you cannot
base your business at home
● You should check your tax
position with HM Revenue
& Customs or an accountant
● You must carry out a health and
safety risk assessment when
you start trading. See Carrying
Out A Risk Assessment, page 36
● See Planning Consent For
Businesses, opposite
● See Your Business Rates, p23
Premises and
health and safety
Check for changes in the law
Regulations, figures and sums
of money may have changed since
publication. Update check:
0845 600 9 006
www.businesslink.gov.uk/figures
}
● For more information read:
Five Steps To Risk Assessment 31
(INDG163).
We have an accident report Homeworking: Guidance For
Employers And Employees On
book, so all accidents and
Health And Safety (INDG226).
near-misses are recorded. Contact 0845 345 0055;
It’s a legal requirement www.hse.gov.uk/pubns
but it also helps you to ● More information is available
improve systems to make on the Planning Portal. Contact
sure problems don’t happen www.planningportal.gov.uk
again
~
Fire protection
A fire can have disastrous
effects on people and
businesses. Every business
needs to undertake simple steps
to minimise the risk
An assessment of the specific
risk that fire poses is compulsory
for every business.
There are certain areas that
you must consider for a fire
Ana Rodrigues risk assessment. The fire safety
Eco-Librium Solutions Ltd officer at your local fire station
green construction company can provide you with details.
Folkestone
certain fire-safety standards. You
need to consider escape routes
to a place of safety, fire-resistant
doors and walls, firefighting
equipment, fire alarms,
emergency lighting, safe storage
of flammable materials and staff
training.
If your building is sub-standard,
you may need to make
alterations. And if you change
your workplace in any way,
it is essential that fire-safety
The No-Nonsense Guide

standards are still met.
32 Some businesses also require
a fire certificate. You must obtain a
fire certificate if:
● you employ more than 20
people, or more than ten of
your employees work above or
below ground floor
● more than one business
operates in the same building
and in total there are more
than 20 employees, or more
than ten employees working
above or below ground floor
● you store certain hazardous
substances on your premises
● you run a hotel or guesthouse
with sleeping accommodation
for more than six, or with
any sleeping accommodation
below the ground floor or
above the first floor
The requirement to hold a fire
certificate no long applies as
of October 2006. However, all
companies will be required to
show they have carried out fire
risk assessments and have
controls in place.
Next steps
● You must carry out a fire risk
assessment and check if your
business will require a fire
certificate (up to October 2006)
● You can get guidance from the
fire safety officer at your local
fire station (listed in the phone
book under Fire)
● See Carrying Out A Risk
Assessment, page 36
● For more information read: Fire
Safety: An Employer’s Guide.
The No-Nonsense Guide
}
A health and safety officer
spent a day at our premises
to help carry out a risk
assessment and now we use
six-month reviews to check
that staff know what they
should be doing
~
Nick Horniman
Pets Barn Animal Hospitals
Longhope, Hartpury
and Forest of Dean
Gloucestershire
You also need business advice
This guide covers regulations. You
should also read a guide to general
business advice — from market
research to writing a business plan
Contact 0870 242 2345;
www.archive.official-documents.
co.uk/document/fire/index.htm
Ensuring easy access
for disabled people
Make sure disabled people can
access the goods and services
your business offers
You mustn’t discriminate against
disabled people you employ or
who use your goods or services.
If you provide services to the
public, you must make ‘reasonable
adjustments’ to the way you
provide your services if disabled
people would otherwise find
it impossible or unreasonably
difficult to access them.
Making a reasonable adjustment
might mean you have to:
● change a policy, practice or
procedure (waiving a ‘no dogs’
policy for customers with guide
dogs, for example)
● provide an extra aid or service
(such as a hearing loop or
arranging goods on shelves
so that popular items are at a
range of heights)
● overcome a physical feature of
your premises where it makes
it impossible or unreasonably
difficult for a disabled person
to access your service by:
removing it, altering it,
providing a reasonable means
of avoiding it or providing
the service by a reasonable
aternative method.

You are required to make
adjustments that are reasonable
given the circumstances. Factors
such as practicality and cost
are taken into account. What is
considered reasonable will differ
between large organisations and
small organisations with limited
resources.
Next steps
● You must review your services
and premises with disabled
access in mind
● See Workers with Disabilities,
page 71
● Get further information and
advice from the Disability Rights
Commission. Contact retain a copy of the note for three
08457 622 633; www.drc-gb.org
● For more information on the
laws relating to disability visit that produce hazardous waste
www.direct.gov.uk/DisabledPeople
Managing and
transporting waste
and packaging
Your business is responsible for
any waste it creates. Remember
that good waste management
could save you money
You must store waste safely
and securely in suitable sacks,
containers or skips, making sure
it doesn’t harm the environment.
All waste collected from your
business must be disposed of
correctly using an ‘authorised
person’ such as the local council
or a waste contractor.
When you hand over your
waste, you must complete a
waste transfer note describing
the waste and its origin and keep
it for at least two years.
Special rules apply if you
dispose of hazardous waste
— such as oily wastes, acids,
solvents and solvent-based
products (paints, for instance) or
fluorescent light tubes. A good
indication that material is covered
by these rules is if it has a hazard
symbol or safety-data sheets. You
must complete a consignment
note when this type of waste is
moved or disposed of. Everyone
involved in transferring it must
years, with copies passed to the
Environment Agency. Many sites
have to register annually with
the Environment Agency — those
producing less than 200kg may
be exempted.
If you turn over more than £2m
and handle more than 50 tonnes
of packaging a year you must
register with the Environment
Agency or join an approved
compliance scheme. You must
provide evidence that you are
recovering and recycling a set
amount of packaging waste (a
compliance scheme can do this
for you). Handling packaging
can mean: manufacturing raw
materials used for packaging
(cardboard, for example);
turning these raw materials
into packaging (making a
cardboard box); putting goods
Premises and
health and safety
into packaging; selling packaging
or packaged goods; leasing or 33
franchising packaging; importing
packaging.
Businesses which transport
waste or arrange to collect or
transport waste on behalf of
others need a licence from the
Environment Agency.
Under new EU-wide rules,
manufacturers, sellers and
distributors of electrical and
electronic equipment (EEE) will
have to register with the
Environment Agency and
meet recovery and recycling
targets. The implementation
date for these changes is
expected to be announced during
2006.
Next steps
● Envirowise gives free,
independent and confidential
advice on helping you to reduce
waste and save money. Or ask
for their free half-day waste
audit. Contact 0800 585794;
www.envirowise.gov.uk
● For web-based guidelines on
how to comply with environmental
legislation, contact
www.netregs.gov.uk
● For advice on packaging waste
legislation, and the management
and transportation of waste,
contact the Environment Agency:
08708 506 506;
www.environment-agency.gov.uk/
subjects/waste
● For more information on
handling waste read: Waste
Management: The Duty of Care
— A Code of Practice.
The No-Nonsense Guide
 It worked for me
How I make
sure we get
our premises
right
Ashley Cooper, joint managing
director and chief executive
officer of TES Aviation Group,
34 has moved his company four
times since founding it from
home in 1995. The business
now employs 50 people and
occupies 8,000 square feet of
office space and 47,000 square
feet of warehousing
}Our group provides
independent aircraft engine-
asset management, engine
part-out and consultancy
services for banks, financiers
and airlines worldwide. When
we started we set up in my
front bedroom with minimum
overheads. We had phone, fax
and Internet lines, and it was
just me and my co-founder.
It was when we needed to
take on somebody and went
into office space in a local
authority business park that
we first had to have employers’
liability and public indemnity
insurance. We took advice
from our solicitor about it, and
our Training and Enterprise
Council, now the Learning and
Skills Council, was very good in
giving basic advice.
From early on we took
out professional indemnity
insurance too. We deal with
equipment values in the
$5m-$10m range and our
decisions can impact on the
reliability of that equipment.
Professional indemnity wasn’t
The No-Nonsense Guide
a legal requirement but it was a
sensible step.
After six months in our first
offices we moved within the same
building to offices twice the size.
Then we moved again, a year
later, becoming the first tenants
at an innovation park built by the
local authority.
We moved again within this
building and now our offices are
open-plan and spacious. We
don’t have to worry about
space-per-employee regulations
as we’re well above the
minimum, but we’ve had health
and safety consultants come in
and look at our chairs, desks
and lighting. We’ve found we’ve
been complying just on the
basis of doing what we felt was
reasonable anyway.
In every premises we’ve been
in, fire and building regulations
have been covered by the
landlords. Obviously we have fire
drills, keep accesses clear and
comply with other requirements
but all of the regulatory stuff is
taken care of. Insurance has had
to be revised every time we’ve
Simon Ridgway
High-flyer Ashley: offices need
insurance cover
moved, geared to the number
of people we have.
We have warehouse
premises too and you need
different insurances for that.
You still need public liability
insurance and there’s product
liability also. Then there are
environmental health issues.
A warehouse is cold but we
ensure its office is heated to
the right level.
There’s also legislation
surrounding what you can
lift, what you need a forklift
for, how your shelving has
to be arranged… our quality
manager looks after all of this.
~
TES Aviation Group Limited
Abercynon, South Wales
Tel 01443 740740
www.tes-uk.com

Advice in Scotland
Business Gateway in Lowlands
(0845 609 6611;
www.bgateway.com);
Highlands & Islands Enterprise
(01463 234171; www.hie.co.uk)
Contact 08459 33 55 77; substances such as CFCs, HCFCs
www.defra.gov.uk/index
● For further advice about the
waste electrical and electronic
equipment (WEEE) Directive
contact www.environment-agency.
gov.uk/weee
Other environmental
concerns
Your business can affect the
environment around you
Businesses that discharge
wastewater from their premises
into the sewerage system must
get consent from their local
water company.
If wastewater from your
premises goes directly into rivers,
streams, lakes, ponds, canals,
estuaries, coastal waters or
groundwater, you must apply for
a permit from the Environment
Agency.
Businesses that cannot meet
their water needs through the
mains water supply must apply
to the Environment Agency for a
licence if they require more than
20 cubic metres per day.
If your business creates
emissions into the air you should
check any restrictions with your
local authority. Activities such as
manufacturing and combustion
may require a Pollution
Prevention and Control permit
from the Environment Agency or
your local authority.
The use of ozone-depleting
and halons is being phased out,
and restrictions cover their use,
storage and disposal.
Next steps
● For more information visit is as safe as possible for
www.netregs.gov.uk
● Get in touch with the
Environment Agency for a
permit to discharge wastewater
into the water environment or
to abstract more than 20 cubic
metres of water per day. risks. There are also special
Contact 08708 506 506; requirements if your business
www.environment-agency.gov.uk
● Check with your local authority
if there are any restrictions on
your emissions to air
● Look under Water in the phone
book to contact your local water
company
Health and safety
essentials
The Health and Safety at Work
Act sets out general guidelines
for health and safety and
requires every business to
conduct a risk assessment
Employers, the self-employed
and employees all have a
responsibility to ensure the safety
of premises, equipment and the
working environment under the
Health and Safety at Work Act.
Even if you work on your own or at
home the Act still applies to you.
You need to ensure as far as
Premises and
health and safety
possible your own safety as well
as that of any employees, visitors, 35
contractors and customers at
your business premises. All
employees need to be aware of
their responsibilities and make
sure their working environment
themselves and their colleagues.
Every business must formally
assess the health and safety risks
created by its working activities
and act on the results of that
assessment to eliminate or reduce
deals with dangerous substances.
Next steps
● See Carrying Out A Risk
Assessment, page 36
● See Using Your Home As Your
Workplace, page 30
● See Registering Your Business,
page 36
Minimum workplace
standards
There are rules designed to
ensure the comfort and safety
of everyone in a working
environment
In any workplace there must
be clean, working toilets. Mixed
facilities are allowed, provided
they are enclosed and lockable
from the inside. Hot and cold
water, soap and towels or a
hand-dryer must be available.
The No-Nonsense Guide

There must be a supply of mains
36 or bottled drinking water.
Working areas should be
cleaned and waste removed
regularly, and there must be
sufficient space and ventilation
for people to work comfortably. It
is recommended that employees
should have at least 11 cubic
metres each as a working space.
The temperature should
be comfortable — at least 16
degrees Celsius where people
are seated or don’t have to move
much and at least 13 degrees
Celsius where people are active.
If the temperature must be lower,
people should not be exposed for
too long and should wear suitable
clothing. If you have employees,
you must provide this clothing.
Next steps
● For more information read:
Workplace Health, Safety &
Welfare (INDG244). Contact but the risk of it doing so in an
0845 345 0055; office is remote provided the
www.hse.gov.uk/pubns
Carrying out a risk
assessment
Every business has to carry out a
risk assessment by law — even
if you don’t employ anyone or
you work from home
A risk assessment is a careful
examination of what, in your
work, could cause harm to
people, so you can weigh up
The No-Nonsense Guide
Advice in Wales
Business Eye (08457 96 97 98;
www.businesseye.org.uk)
whether you have taken enough
precautions or should do more to
prevent harm.
Risks could be caused by
a range of common hazards,
including:
● slips, trips and falls
● working at height
● manual handling of loads
● exposure to hazardous
substances
● high noise levels
● vibration from tools or
equipment
● vehicles moving around the
workplace
● fire and explosion
The important things you need
to decide are whether a hazard
is significant and whether you
have it covered by satisfactory
precautions so that the risk is
small. You need to check this
when you assess the risks. For
example, electricity can kill
live components are insulated
and metal casings are properly
earthed.
If your business has relatively
few risks, you can carry out the
assessment yourself. Businesses
with more complicated health
and safety requirements may find
it useful to have the assessment
carried out by a specialist.
The risk assessment only
needs to be written down if you
employ more than four people.
If you are responsible for the
maintenance of your premises,
you must identify and manage
any asbestos-related risks.
Next steps
● For more information read:
Five Steps To Risk Assessment
(INDG163). Contact
0845 345 0055;
www.hse.gov.uk/pubns
Registering your
business
Many businesses need to be
registered with health and safety
authorities
If you have any employees
or the public has access to
your premises as part of your
business, you will probably have
to register.
If you have employees in
an office or shop or catering,
care or leisure facility,
register with your local
council’s environmental
health department. Other
kinds of business — including
manufacturing businesses
based in factories, engineering
workshops, car-repairbusinesses,
nursing homes and agriculture-
based businesses — must
register with the Health and
Safety Executive.
Next steps
● Use an online flowchart
to check if you need to
register with the Health
and Safety Executive or
your local council.

Contact 0845 345 0055;
www.hse.gov.uk/
smallbusinesses/flowchart.htm
Insuring your
employees
You must insure against claims
arising from illnesses, diseases
or injuries your staff may pick up
as a result of working for you
Employers’ liability insurance,
which protects your business
against claims from employees
for accidents or sickness they
may suffer as a result of working
for you, is a legal requirement.
The statutory minimum cover is
£5m and you should display the
certificate in any place of work.
Keep your certificates even after
they have expired — employees
could make a claim many years
after they have worked for you.
Next steps
● For more information read:
Employers’ Liability (Compulsory
Insurance) Act 1969: A Guide For
Employers (HSE40). If you don’t oversee health and
Contact 0845 345 0055; safety in your business, you must
www.hsebooks.co.uk
}
The Health and Safety
Executive website is very
useful — you can go there
and print off a basic idiot’s
guide to health and safety
~
Malcolm Cooper
Steel Benders UK
Middlesbrough
Premises and
health and safety
37
Informing your staff
about health and safety
If you have staff, you need a
health and safety policy and you
must keep employees up to date
and involved with your health
and safety procedures
You must have a health and safety
policy, and if you have more than
four employees, it needs to be
in writing. This policy must be
made easily available and revised
regularly, particularly whenever
the physical nature of your
workplace changes. You must
also have procedures in place in
case of fire or other emergencies.
You should either display the
poster Health and Safety Law:
What You Should Know in any
place of work, or give employees
the same information in a
leaflet. You must give employees
information about risks to their
health and safety and about the
preventive measures that are in
place to control risks. And all
employees have a right to be
consulted on health and safety
issues that may affect them.
appoint someone to do so. They’ll
need to be aware of all relevant
law and industry standards that
exist and you must give them the
authority to implement the health
and safety policy.
The No-Nonsense Guide

Next steps
38
● For more information read:
Health And Safety Law: What
You Should Know (laminated
poster, £6.38 plus VAT); An
Introduction To Health And
Safety (INDG259). assessment to see whether this
Contact 01787 881165; person ought to hold a first-aid
www.hsebooks.co.uk
● For more information about
consultation read: Consulting
Employees on Health and Safety
(INDG232). to their health and safety cannot
Contact 0845 345 0055; be controlled in other ways. You
www.hse.gov.uk/pubns
Protecting your
employees
There are specific regulations
that help businesses minimise
the risks of accidents happening
You must check and maintain
all working equipment on a
regular basis to ensure that it
complies with the necessary
safety regulations. You must keep
certificates to show certain types
of equipment have been tested.
You also have a duty to assess
the risks to your employees if
their job involves heavy loads or
repetitive handling of objects.
Potentially hazardous handling
operations need to be identified
and appropriate actions put in
place to reduce the risk of injury.
Providing suitable first-aid
facilities is compulsory and your
staff need to know where any
The No-Nonsense Guide
}
first-aid boxes are located. You
need to nominate someone to
be responsible for restocking
first-aid boxes and to take charge We have to comply with all
in an emergency (and call an
sorts of current British and
ambulance if necessary). You
should carry out a first-aid needs
European standards. We
worked with the HSE from
the start — they were very
certificate. approachable and made
You must supply all employees sure we had all the right
with suitable protective information to make our
equipment for their job, if risks
product and our production
line fully compliant
~
must not charge employees
for protective equipment they
require. This equipment should
be maintained to a high standard,
stored appropriately and
discarded once it is no longer
effective. Personal protective
equipment includes protection for
the body, head, eyes, feet, hands
and arms. This includes goggles,
hard hats, safety boots, hairnets,
crash helmets, gloves, overalls
and aprons.
Control measures and
precautions should be put in place
to minimise your employees’
exposure to hazardous substances.
James Wilson
Staff who work or will work with Vale Engineering (York) Ltd
potentially dangerous substances York
need to be informed of hazards,
fully trained and aware of their
health and safety duties.
There are other rules that
apply to specific types of business
or business activity. Check with
the Health and Safety Executive
or your local Business Link if you
are unsure.

Next steps
● To find out more, visit the Health
and Safety Executive website.
Contact www.hse.gov.uk
● For more information read:
Essentials Of Health And Safety
At Work (HSE Books, price
£10.95). Contact 01787 881165;
www.hsebooks.co.uk
Computers and
employees
You have to make sure you
and your employees use
computers safely. As well as
checking that monitors and
keyboards allow users to work
comfortably, give users regular
breaks and carry out risk
assessments
Visual display units (VDUs) must
show clear characters with
adequate spacing and the screen
image must be stable with no
flickering. Users should be able
to easily adjust the brightness
and contrast. The screen must
tilt and swivel to suit the needs
of the operator and be free of
reflected glare.
The keyboard must be tiltable,
and separate from the screen
(unlike most laptops) allowing a
comfortable working position and
avoiding fatigue in the arms or
hands.
The work chair must be stable,
with height adjustment, and the
seat back must be adjustable in
Advice in Northern Ireland
Invest Northern Ireland
(028 9023 9090; www.investni.com)
both height and tilt.
Workstation and workplace
layout should be planned to
prevent possible disturbing glare
or reflections on the screen from
sources of light such as windows.
Workstations should give the
user sufficient space to change
position and vary movements.
Training must be given to
users on health and safety and
how to use software.
Employers must plan the
activities of users so that their
daily work on display screens
is periodically interrupted by
breaks or changes of activity. It
is recommended that users take
intervals away from screens at
least every two hours.
Employees using computers
are entitled to eyesight tests paid
for by you at regular intervals or
when they are requested.
You must carry out regular
risk assessments on computer
workstations and the people
who use them to ensure they
are safe. You need to assess the
entire workstation (including
equipment, furniture and its work
environment), the work being
done on the computer and any
specific needs of the staff using
the workstation. Pay particular
attention to users’ posture.
You must take steps to reduce
any potential health risks you find.
Next steps
● For more information read:
Working With VDUs (INDG36).
Contact 0845 345 0055;
www.hse.gov.uk/pubns
Premises and
health and safety
39
Reporting incidents
The Reporting of Injuries,
Diseases and Dangerous
Occurrences Regulations
(RIDDOR) require you to report
and keep records of accidents
and other workplace incidents
If there is a serious injury, death,
work-related disease or other
dangerous incident in your
workplace, you must report it to
the Health and Safety Executive’s
Incident Contact Centre or your
local authority.
Reportable injuries include
major injuries such as broken
bones or loss of consciousness,
as well as less severe injuries
that result in someone being
away from work or unable to
carry out their normal duties for
more than three days.
You must also keep records
of any reportable occurrence for
three years.
Next steps
● For more information read:
RIDDOR Explained (HSE31).
Contact 0845 345 0055;
www.hse.gov.uk/pubns
● Keep up to date with changes
to RIDDOR and report incidents
to the Incident Contact Centre:
0845 3009923;
www.riddor.gov.uk
The No-Nonsense Guide
 All businesses own assets called intellectual property — perhaps just the name of the
business, or copyright, designs, patents and trade marks. Intellectual property can be worth
money. Some types have automatic legal protection. Others can be protected by registration.
You must also be aware of and respect other businesses’ intellectual property
Protecting your
intellectual property
40
Business names
and domain names
The name of your business
is generally protected by the
common-law principle of
passing off
Passing off can occur if your
business name has, through
use, established a reputation for
trading in a particular field and a
competitor starts using the same
or similar name for the same or
similar goods and services. You
can take court action on the
basis that your rival is falsely
passing off their goods or
services as yours.
Sometimes duplication of
names is caused by genuine
ignorance and may be settled by
negotiation, but you’re advised to
seek a qualified legal opinion at
an early stage.
Domain names (your web
address) have to be registered
for use on the Internet. Nominet
UK is the registry for .uk Internet
names and also provides advice
on registering and maintaining
your Internet name.
If you believe that somebody
else has registered your business
name, brand name or registered
trade mark as a domain name,
and that this constitutes an
infringement of a trade mark or
an act of passing off, you should
seek a qualified legal opinion.
Nominet UK can’t offer legal
advice but may be able, through
its Dispute Resolution Service,
The No-Nonsense Guide
to help parties in dispute over a
domain name; this might avoid
your going to court.
Next steps
● It’s best to get legal advice
at an early stage if you think
somebody else is using your
business name or trade mark,
or something close to it, either
generally or as an Internet
domain name
● Nominet UK can give advice
on domain names and their
registration and may be able to
resolve a dispute. Contact
01865 332211; www.nic.uk
● Check availability of domain
names at Nominet at
www.nic.uk or NetNames at
www.netnames.co.uk
● See Choosing The Right Name,
page 8
Protecting your
trade marks
Trade marks are symbols, signs
or even words, sounds or shapes
which distinguish the goods
and services of one trader from
those of others
Trade marks help customers and
other businesses recognise a
business and identify it with the
quality of product or service for
which it is known.
They are often the single
most valuable marketing tool
a business will have, whatever
its size, and can be essential in
developing a brand.
Trade marks don’t need to be
registered. Provided sufficient
trading reputation and goodwill
have been built up in a mark, a
degree of protection is afforded
by common law.
For a court action based on an
unregistered mark to succeed,
you have to show that the mark
embodies a reputation and that
its use by somebody else is liable
to confuse or deceive the public
and has done actual damage to
your business.
But registration of the trade
mark gives an immediate right
to stop someone using the same
or a similar mark on the same or
similar goods and services, without
your having to prove reputation or
demonstrate confusion.
Owners of trade marks are
advised to register the trade
mark with the Patent Office
where this is possible. A trade
mark is registered for ten years
and can be renewed every ten
years. Once registered it can be
renewed indefinitely.
Registered trade marks can
be enforced by going to court.
You can get damages and
an injunction to stop further
infringement.
Next steps
● The Patent Office produces a
free trade mark information
pack and will answer your
questions on how to protect your
ideas or find out about other
people’s rights.

Contact 0845 9 500 505;
www.patent.gov.uk
● Check that any product or
service you’re planning to offer
doesn’t infringe any existing
rights. Penalties can be severe,
whether the breach is deliberate
or not. Trade marks, registered
designs and patents can be
checked online at the Patent
Office’s website. Contact
www.patent.gov.uk
● The Government-backed
intellectual-property.gov.uk
website can also guide you
through trade marks as well as
copyright, designs and patents.
Contact
www.intellectual-property.gov.uk
● A trade mark attorney can
provide professional paid-for
advice. Contact the Institute of
Trade Mark Attorneys at
020 8686 2052;
www.itma.org.uk
● Members of the Chartered
Institute of Patent Agents can
also advise you. Contact
020 7405 9450; www.cipa.org.uk
Patents and
their benefits
Patents protect your inventions
and prohibit others from
making, using or selling an
invention without the inventor’s
permission
Patents, which you register at
the Patent Office, are concerned
with the functional and
}
We filed a trade mark for
our logo and product name.
It was straightforward
— you can do it yourself by
going to the Patent Office
website
~
Afzaal Ahmed
Fixits
toy manufacturer
Newcastle upon Tyne
Protecting your intellectual
property
Check for changes in the law
Regulations, figures and
sums of money may have changed
since publication. Update check:
0845 600 9 006
www.businesslink.gov.uk/figures
technical aspects of products
and processes. The invention 41
could be a new product, a new
process, a new apparatus for
performing a process or possibly
a new use for a known product.
Patented inventions can simply
be improvements on an earlier
invention.
You are not obliged to apply for
a patent to protect your product
or processes — you could rely
on keeping the information
confidential. But without a patent
you would lack the right to stop
others from making, selling or
importing the product or process
you have developed.
Patents, which can protect
your invention for a maximum
of 20 years, can be a valuable
commercial asset:
● by preventing competitors
trading in products or using
methods covered by the patent,
patent-owners can get premium
prices for their products
● the patent-owner can earn
royalties by licensing products
that use the patent
● patents can be bought and sold
like any other asset
Patents are enforced by legal
action. You can get damages
and an injunction to stop further
infringement.
Next steps
● The Patent Office produces a
free patent information pack and
will answer your questions on
how to protect your ideas or find
out about other people’s rights.
The No-Nonsense Guide
 It worked for me
How I
protected
my business
idea
When Peter Manning came
up with the winning idea
of an innovative flat-pack
42 waterbutt, he made sure he
could maximise its potential by
protecting the product with a
combination of patents, trade
marks and design registration
}
Inventions are my passion.
When the idea for a slimmed-
down waterbutt which can be
flatpacked hit me I was feverish
on the drawing board. Within a
couple of days I had something
I could use to draw up a patent
application.
You must get the application
right first time, so I’d always
advise going to an agent. The
other thing I did was get a
patent search done to make
sure the idea wasn’t already
patented. I paid somebody at
the Patent Office to do this as
I didn't want to miss anything.
I was really pleased when they
came back and said I was OK
to proceed.
Patenting can be an
expensive process and you
don’t know if you have a
patent until two or three years
later, but it’s worth doing. You
want to make sure you don’t
spend time and money on a
project when you’re infringing
someone else’s patent, and you
want to stop anybody copying
you if you do get the patent.
The No-Nonsense Guide
Once I’d sorted out all the
technical problems of my product
I got its aesthetic details right.
Then I got an application form
from the Patent Office for design
registration. Being design-
registered means that if someone
gets round my patent the actual
style of my product is protected.
When I applied for it I realised
it wasn’t just a waterbutt I’d
designed. It could also be a
hose store, a mini-greenhouse,
whatever. So I registered it as a
garden storage system. I kept the
application as broad as possible.
I took out Aquastor, Growstor
and Patiostor trade marks too.
Patents can be a nightmare
because of the claims and
abstracts you have to put in,
but trade marks are pretty
straightforward.
After securing significant
investment finance, I set up
Esstor Ltd to market the product.
As I was interviewing sales
people I was approached by
a large French company who
wanted a licence on it. When I
went to see them, having all the
Ian Newton/UNP
Peter: high credibility for his
innovative garden product
protection in place proved that
I was treating the project very
seriously and proved my belief
that it was going to be big.
I also had them sign
confidentiality agreements.
It took two months going back
and forth with the company
and a specialist intellectual
property solicitor, but a
licensing agreement was
drawn up eventually.
Esstor is now operating as a
bank account-only company to
receive royalties. And I’ve now
taken out a patent, registered
the design and signed a
contract with a large UK
company for a new concept in
garden buildings.
~
Manning Design Associates Ltd
Bristol
Tel 01454 250363

You also need business advice
This guide covers regulations. You
should also read a guide to general
business advice — from market
research to writing a business plan
Contact 0845 9 500 505;
www.patent.gov.uk
● Check that any product you’re
planning to offer doesn’t infringe
any existing rights. Penalties
can be severe, whether the
breach is deliberate or not.
Trade marks, registered designs
and patents can be checked
online at the Patent Office’s
website. Contact
www.patent.gov.uk
● The Government-backed
intellectual-property.gov.uk
website can also guide you
through patents as well as
copyright, designs and trade
marks. Contact
www.intellectual-property.gov.uk
● Patent attorneys, members of
the Chartered Institute of Patent
Agents, provide professional
paid-for advice on patents. The
institute organises clinics giving
free basic advice to innovators.
Contact 020 7405 9450;
www.cipa.org.uk
Understanding
copyright
Copyright gives rights to the
creators of original literary,
dramatic, musical and artistic
works and published editions
of works, sound recordings,
films, videos, broadcasts, cable
programmes and computer
programs
The creator of the work can
use copyright to control its
exploitation for money and any
copying, adapting, publishing,
performing and broadcasting.
There is no registration system
for copyright in the United
Kingdom. It comes into operation
automatically when it is ‘fixed’
in some manner — it physically
exists as a manuscript or software
program, for example. The owner
has the legal responsibility to
prove they own the copyright.
Generally, the owner of
copyright is its first creator
or author (or their employer
if the material is produced in
the ordinary course of their
employment).
But be careful when using
a contractor. Photographers
and website and graphic
designers, for example, retain
copyright ownership in the
work unless their contract says
otherwise.
There is no copyright in a
name, title, slogan or phrase,
although you may be able to
register them as trade marks.
Copyright can’t protect an
idea although it may protect a
piece of work that expresses
an idea.
You can buy, sell or transfer
copyright. Or you can license
others to use the work — a
song or software, for instance
— while paying you royalties. You
retain ownership over the rights
themselves.
Copyright in literary,
dramatic, musical or artistic
work lasts until 70 years after
the death of the author. Sound
recordings, broadcasts and cable
Protecting your intellectual
property
programmes are protected for
50 years. 43
Remember, you must not copy
anything without a copyright-
holder’s permission: court orders
for compensation can be very
high. This includes photocopying,
scanning and downloading
copyrighted material from the
Internet.
In certain circumstances
you don’t need permission to
copy or use copyright material
— limited use is allowed for
research, study, reviewing,
reporting current events,
teaching in schools and court
proceedings.
Next steps
● The Patent Office produces a
free copyright information pack
and will answer your questions
on how to protect your ideas or
find out about other people’s
rights. Contact 0845 9 500 505;
www.patent.gov.uk
● Check that any product or
service you’re planning to offer
doesn’t infringe any existing
rights. Penalties can be severe,
whether the breach is deliberate
or not. Trade marks, registered
designs and patents can be
checked online at the Patent
Office’s website. Contact
www.patent.gov.uk
● The Government-backed
intellectual-property.gov.uk
website can also guide you
through copyright as well as
designs, patents and trade
marks. Contact
www.intellectual-property.gov.uk
The No-Nonsense Guide
 Advice in Scotland
Business Gateway in Lowlands
(0845 609 6611;
www.bgateway.com);
Highlands & Islands Enterprise
(01463 234171; www.hie.co.uk)
● Patent attorneys, members of
44 the Chartered Institute of Patent
Agents, provide professional
paid-for advice on copyright.
Contact 020 7405 9450;
www.cipa.org.uk
Registered design
and design right
You can protect the design of the
outward shape or configuration
of products, and patterns and
ornamentation
Design right, an automatic
right like copyright, and design
registration give the owner
the right to stop other people
making, using or selling the
same or similar designs.
The appearance of a product’s
outward aspect may be crucial
to its market success or failure,
whatever its other attributes.
A registered design is
a monopoly right for the
appearance of the whole or
part of a product, resulting
particularly from the features
of lines, contours, colours,
shape, texture and materials of a
product or its ornamentation.
These designs could be
anything from patterns on
textiles or plates to the shape of a
car or part of a product, such as a
kettle handle.
Design right is less
extensive, protecting just shape
and configuration but not
ornamentation.
The No-Nonsense Guide
A registered design, which
requires an application to the
Patent Office, also provides
stronger protection than
design right.
A registered design lasts for
five years initially and may be
extended over four five-year
periods up to a maximum of 25
years. Design right lasts for ten
years from first marketing up to
an overall limit of 15 years from
first creating the design.
An application for design
registration requires just a
few pictures showing different
views of the design and some
information about how the
design might be applied. The
design’s creation must involve
‘freedom of design’ — so if a jug
has a distinctive shape it can be
registered because it could have
a variety of shapes and still be a
jug.
Remember that legally
licensing your design ideas to
other users can be an important
source of revenue.
Next steps
● The Patent Office produces a
free design information pack
and will answer your questions
on how to protect your ideas or
find out about other people’s
rights. Contact 0845 9 500 505;
www.patent.gov.uk
● Check that any product or
service you’re planning to offer
doesn’t infringe any existing
rights. Penalties can be severe,
whether the breach is deliberate
or not. Trade marks, registered
designs and patents can be
checked online at the Patent
Office’s website. Contact
www.patent.gov.uk
● The Government-backed
intellectual-property.gov.
uk website can also guide
you through design right and
registration as well as copyright,
patents and trade marks.
Contact
www.intellectual-property.gov.uk
● Patent attorneys, members of
the Chartered Institute of Patent
Agents, provide professional
paid-for advice on designs.
Contact 020 7405 9450;
www.cipa.org.uk
Intellectual property
protection overseas
Protection of trade marks,
patents, copyright and designs
becomes more complicated if
you want your business to tap
into foreign markets or you
want to protect your rights
abroad. The UK Patent Office
can advise you
Trade marks are territorial: a
UK trade mark offers protection
only within the UK. There are
three routes to secure protection
overseas for your trade mark:
● a series of individual trade
mark applications filed in
each country in which you are
seeking protection
● for protection in all European
Union countries, applying

for Community Trade Mark
registration at the Office for
Harmonisation in the Internal
Market (OHIM)
● an application to the World
Intellectual Property
Organisation (WIPO) in
Geneva to obtain trade mark
Software copyright and licences
When using software you
must comply with the
conditions of the licence and
the software publisher’s
copyright. Don’t make illegal
copies or use software on
more computers than the
licence allows
You mustn’t breach the licence
of any computer software
you use in your business. The
licence sets out the software
publisher’s conditions for your
use of the software.
You also must not commit
software ‘piracy’ by doing things
such as making illegal copies.
Software offences include:
● making or selling illegal
copies of software
● installing or using illegal
copies, even unknowingly
● allowing a consultant to
install unlicensed software
on your system
● using legally acquired
software on more
computers than the licence
allows; the licence will state
the number of computers
registration in a number of
countries across the world
Patents are similarly territorial: a
UK patent offers protection only
within the UK.
At present there is no such
thing as a world patent, and to
on which you may use the
software; unless it states
otherwise, you may only use
one copy of the software
on one computer. However,
many licences allow you to
retain up to two copies for
back-up purposes
● allowing employees to install
unlicensed software on your
system
● allowing employees or
business contacts to
make unlicensed copies of
software
● using software for
commercial purposes when
it is provided free or at a
reduced price for academic
or personal use
Next steps
● You can get more information
on software piracy and
licensing from the Federation
Against Software Theft at
01628 622121; www.fast.org.
uk and from the Business
Software Alliance at 020 7245
0304; www.bsa.org/uk
Protecting your intellectual
property
get protection abroad there are
three choices: 45
● separate national applications
can be made in each country
in which you are seeking
protection
● the European Patent
Convention, under which
protection can be obtained
in one or more European
countries by a single
application to the European
Patent Office
● the Patent Cooperation
Treaty, which includes most
of the major industrialised
countries and simplifies filing
procedures if protection is
required in more than one of
the member states
Copyright is not widely respected
in some countries, and making
claims through a court in those
countries can be difficult.
Through OHIM a Registered
Community Design provides
a single registered right
giving design protection in
all EU countries. A number
of other countries (mainly
Commonwealth) recognise
UK-registered designs without
the need for local registration.
Next steps
● The Patent Office can answer
your queries and supply free
information packs on European
and international trade marks
and patents. Contact
0845 9 500 505;
www.patent.gov.uk
The No-Nonsense Guide
 As well as the general regulations that all enterprises must comply with, many businesses
— from childminders and sandwich-bar owners to taxi drivers — are affected by specific
regulations and sometimes need special licences
Is your business in a
specialised sector?
46
Food businesses
If you run a business which
makes, handles or sells food, you
must comply with hygiene rules
to make sure it is safe to eat
Food businesses have to meet a
range of requirements relating
to the design of their premises,
the way staff handle food and the
temperature at which food is kept.
Food businesses must
register their premises with their
local authority at least 28 days
before they start trading. They
must take steps to ensure all food
produced and sold is safe to eat,
and should keep a written note of
these steps.
Businesses selling packaged
food to consumers or to other food
businesses must include certain
information on the packaging.
There is a range of product-
specific regulations you may have
to comply with. These generally
affect manufacturers of animal-
based products. Contact your
local authority’s environmental
health service for guidance.
Businesses throughout
England and Wales that sell hot
food or drink between 11pm and
5am require a licence from their
licensing authority (usually within
the local authority).
Next steps
● For more information read:
Starting Up: Your First Steps To
Running A Catering Business;
The No-Nonsense Guide
Food Safety Regulations; Guide
To Food Hygiene. Contact Food
Standards Agency: alcohol_and_entertainment
0845 606 0667; www.food.gov.uk
● A list of local authority websites
and phone numbers can be
found at www.direct.gov.uk
Entertainment and
leisure
Businesses that sell alcohol or
provide entertainment usually
require a licence
Any business selling alcohol or
providing regulated entertainment
must apply to their licensing
authority (usually within the local
authority) for a licence. Application
fees vary depending on the
rateable value of the premises.
This requirement affects
establishments such as pubs,
bars, restaurants, clubs, hotels,
supermarkets, off-licences,
takeaways, cinemas, theatres or
community halls.
Some individuals supplying
alcohol may also need to apply
for a personal licence.
Next steps
● For further information, contact
your local authority. A list is
available at www.direct.gov.uk
● Details of the licensing
requirements for businesses
selling alcohol or providing
entertainment are available on
the Department for Culture,
Media and Sport website.
Contact www.culture.gov.uk/
Health and care services
Childminders, care homes and
other businesses which look
after people have to register
with the relevant body
Childminders and child day-care
nurseries must register with the
Office for Standards in Education
(Ofsted), as must boarding schools,
further education colleges and
residential special schools.
Care homes, children’s homes,
residential family centres, home-
care agencies, fostering agencies,
nursing agencies and voluntary
adoption agencies must register
with the Commission for Social
Care Inspection.
Providers of independent
medical care and companies
providing intense pulsed light
and some laser treatments must
register with the Healthcare
Commission.
Businesses requiring a licence
from their local authority's
environmental health department
include acupuncture, beauty
salons, and massage services.
Next steps
● Contact the Office for Standards
in Education: 0845 601 4771;
www.ofsted.gov.uk/childcare
● Contact the Commission for

Social Care Inspection: passengers, you must get a
0845 015 0120; www.csci.org.uk
● Contact the Healthcare
Commission: 020 7448 9200;
www.healthcarecommission.org.uk
● A list of local authority websites
and phone numbers is available
at www.direct.gov.uk
Transport businesses
Businesses which transport
goods or people normally need
a licence
Businesses which transport
goods need an operator’s licence
if they use a vehicle with a plated
weight of more than 3.5 tonnes.
This applies even if you have hired
the vehicle or you are transporting
goods just for one day.
There are different types of
licence depending on whether
you are transporting your own
goods, or other people’s goods,
and whether you are carrying
them within the UK or to other
countries. Licences are issued
by traffic commissioners and
applications should be made to
your local Traffic Area Office.
For safety reasons strict rules
also cover the transport of a
range of hazardous materials
which could be poisonous,
flammable, explosive or corrosive.
Businesses which transport
people normally have to obtain
a licence, too. If you run a taxi
or private hire vehicle (minicab)
which carries fewer than nine
... and
many other
special cases
Many other businesses
require licences or
registration and must
conform to regulations
governing their operations.
Check with Business Link
These pages give an outline
of some of the special
requirements applying to
broad sectors to help you
consider whether your planned
business might be affected.
But there are many other
activities that are regulated
— from manufacturing,
boarding kennels and street
trading to money lending and
handling asbestos.
Next steps
● Check whether your Office. Contact 0870 6060440;
business is affected by
special regulations. ● Get more information on driving
Contact Business Link: licences from the Driver and
0845 600 9 006; Vehicle Licensing Agency.
www.businesslink.gov.uk
● Your local authority’s
environmental health or
trading standards officers can
advise on licences
● For credit licences (for many
activities, from lending money
to hire services) check with
the Office of Fair Trading:
08457 22 44 99;
www.oft.gov.uk
Is your business in a
specialised sector?
Check for changes in the law
Regulations, figures and sums
of money may have changed since
publication. Update check:
0845 600 9 006
www.businesslink.gov.uk/figures
licence from your local authority. 47
If you carry passengers using
a vehicle with more than eight
seats, you will normally need
a Public Service Vehicle (PSV)
operator’s licence. Licences are
issued by traffic commissioners
and applications should be made
to your local Traffic Area Office.
Strict rules also apply to both
goods and passenger-carrying
vehicles on maintenance,
the length of time for which
commercial drivers can drive,
how driving time is recorded,
the number of hours ‘mobile
workers’ can work, and the type
of driving licence they must hold.
Next steps
● The Vehicle and Operator
Services Agency has information
on the rules which apply to
goods and passenger-carrying
vehicles, and can give you
details of your local Traffic Area
www.vosa.gov.uk
Contact 0870 240 0009;
www.dvla.gov.uk
● The Department for Transport
has further information on
drivers’ hours and working-time
rules and can also advise on the
carrying of dangerous goods.
Contact 020 7944 8300;
www.dft.gov.uk
The No-Nonsense Guide
 Selling correctly, getting paid on time and properly storing and using information about other
people and businesses are covered by some straightforward rules designed to make sure you
act responsibly and get a fair deal for yourself and your customers
Trading regulations
and data protection
48
Describing goods
and services
Any descriptions of goods and
services your business supplies
have to be accurate and clear
The rules cover descriptions
given orally, in writing (in an
advertisement or brochure, for
instance) or as an illustration
(perhaps in an advertisement or
on packaging). Any information
you give on the following aspects
of goods is covered:
● quantity, size or gauge
● method of manufacture,
production, processing or
reconditioning
● what the goods are made of
● fitness for the stated purpose,
strength, performance,
behaviour or accuracy
● any other physical
characteristics
● if the goods have been tested,
and the results of any tests
● place or date of manufacture,
production, processing or
reconditioning; this includes
statements such as ‘Made in
the UK’
● if the goods have been
approved or endorsed by a
person or organisation
● who manufactured, produced,
processed or reconditioned
the goods (this includes brand
names)
● any other history of the goods,
including previous ownership
or use
The No-Nonsense Guide
When describing services,
you mustn’t make any false or
misleading statements about:
● provision or nature of services,
accommodation or facilities
● when, how and by whom
services, accommodation or
facilities will be provided
● examination, approval or
evaluation by any person of
your services, accommodation
or facilities
● location or amenities of any
accommodation you provide
Next steps
● For more information read:
Trade Descriptions.
Contact your local Trading
Standards office or
www.tradingstandards.gov.uk/
Terms and conditions
of sale
When a customer purchases
goods or services from your
business, you’re entering into a
legal contract
By displaying priced goods in
a shop or window display, in a
brochure or on a price list, you're
inviting customers to make you
an offer for the goods — which
you can either accept or refuse.
A contract is normally formed
when payment is made. At this
point you and your customer have
made formal legal commitments
to one another — though this
may not be the case in distance-
selling arrangements. The
contract can't be cancelled
without both parties' consent
unless either party is in breach
of contract (although there is a
cooling-off period for distance
sales — see Next steps below).
If before a contract is formed
you make factual claims about
a product or service which
turn out to be untrue, and the
customer can show they’ve based
their decision to buy on these
representations, they may be able
to make a claim against you.
Certain terms are implied in
every transaction for the sale and
supply of goods. The goods must:
● match any description given
of them
● be of satisfactory quality;
depending on the
circumstances, this could
cover aspects such as
suitability for their intended
purpose, appearance and
finish, freedom from minor
defects, safety and durability
● be fit for their purpose; the
purpose for which goods will
be used may be obvious (a pen,
for example); but if a customer
expressly indicates they want
to use goods for a particular
purpose the goods must meet
this requirement and you must
tell the customer if you doubt
the goods’ suitability
If the goods don’t meet these
conditions, customers can reject
the goods and demand a full
refund provided they haven’t
accepted the goods. Acceptance

is signified by their telling you
they’ve accepted them (they must
have had the chance to examine
them first), altering them in
some way or keeping them for a
reasonable length of time (this
varies according to the nature
of the goods). But they aren’t
considered to have accepted
goods if they allow you to repair
them when they’re first found to
be faulty. When goods have been
accepted the customer can’t
reject them. But the customer
may still be entitled to a repair,
replacement or some money
back if the goods are faulty or not
in accordance with the contract.
Customers have no rights in
relation to defects brought to
their attention before a sale or
if they examined the goods and
any defects would have been
readily noticeable. Neither can
they complain if they change their
mind (unless the contract was
concluded at a distance: see Next
steps below), damage the goods
themselves or ignore your advice
about the product’s suitability.
Services have to be carried out
with reasonable skill and care, for
a reasonable price (unless a price
has already been agreed) and
within a reasonable time (unless
a date was agreed at the time the
contract was made).
You must not try to restrict
consumers’ statutory rights or
impose contract terms which try
to exclude or limit your liability
for death or personal injury
resulting from your negligence. In
contracts with other businesses
(but not consumers) you may
}
You can’t afford to be
vague on payment terms.
Every time we set a credit
account up we highlight
the paragraphs about late
payment so companies are
fully aware of our intentions
~
Ray Duffy
Midcom (UK) Limited
electrical component
supplies
Leamington Spa
Trading regulations
and data protection
Advice in Northern Ireland
Invest Northern Ireland
(028 9023 9090; www.investni.com)
be able to exclude or limit your
liability for any other types of 49
loss or damage resulting from
negligence — but you will have to
show that this is reasonable.
Your standard terms are
those you decide in advance
rather than negotiate with an
individual consumer. They don’t
have to be in writing, but you
should usually include them in
the ‘small print’ on the back of
order forms, bills and so on. They
should be expressed in plain and
easily understandable language
and customers should have an
opportunity to read them before
entering into a contract.
If one of these standard terms
is unfair, a consumer will not be
bound by it. However, this doesn’t
cover terms which set the price
(provided they’re in plain and
easily understandable language),
terms which tell you what you are
and aren’t getting for your money
or terms which must be included
in the contract by law.
An unfair term is one which isn’t
made in ‘good faith’ and which
puts consumers at a disadvantage
by — for example — imposing
unfair penalties, restrictions or
obligations or making it unclear
what they have to pay.
Potentially unfair terms
typically involve one or more of
the following problems:
● limiting or excluding the
vendor’s legal obligations
● limiting or excluding the
consumer’s legal rights
● imposing excessive financial
penalties on the consumer
● allowing the vendor to retain
The No-Nonsense Guide
 It worked for me

My extra
sales make
online rules
worthwhile
Lucky Dissanayake launched
illustrated-book publisher
Dakini Books five years ago.
50 With the company set to turn
over in excess of £500,000
this year, selling online has
brought sales from as far
afield as California, Kenya and
Hong Kong

}
We only publish about three
books a year, so we invest time
and effort into them and as
one that seemed reasonable
— one that put the money in the
bank the next day, which helped
Volume sales: Lucky checked
the trading rules

much as possible we sell direct
to consumers, one of these
channels being the Internet.
Our whole business is based on
the idea that we create many
additional routes to market.
When setting up the site
we wanted the domain name
dakini, but that was gone so
we settled for dakinibooks. We
registered it with Whois, one
of the centralised databases
that protect domain-name
my cashflow — and didn’t charge
a huge set-up fee.
We had to be registered under
the Data Protection Act. When we
sell a book we take personal and
credit-card details, and under the
Act we’re obliged not to disclose
that information to a third party
unless the client has opted for
that possibility. To register we
just went to the Data Protection
website. It wasn’t difficult.
You have to abide by certain
It was worth doing all the
paperwork needed to trade
online because I believe
firmly that our business is
premised on making it easy
for a customer to buy from
us — and one of the most
convenient channels is the
Internet. It offers an incredibly
level playing field for a small
company – it’s an amazing
network.

registrations worldwide.
I applied for a merchant
number to take credit-
card orders and appointed
distribution companies in
the UK and USA to handle
individual deliveries.
We take Internet orders in
sterling, euros and US dollars.
An online-payment gateway-
company clears payments
automatically into our bank
accounts — when I started
my bank suggested some
companies to me. I just chose
~
criteria but any proper e-
commerce site does that anyway.
They’re basic, like having SSL
on your site — that’s secure
socket layer — so when you’re
processing credit cards online
nobody can hack in.
Of course, sale-of-goods
regulations affect us too. So,
for example, if people receive a
book in a damaged state they can
return it, we have never had this dakini books
as yet. But that’s part of what you London
do: if it wasn’t for the customer I Tel 020 7830 9692
wouldn’t be in business. www.dakinibooks.com

The No-Nonsense Guide


You also need business advice
This guide covers regulations. You
should also read a guide to general
business advice — from market
research to writing a business plan
pre-payments if the contract is
cancelled
● binding the consumer to
hidden terms
● allowing the vendor to change
the terms after they’ve been
agreed (forcing the consumer
to accept a different product, a
higher price or a reduction in
their rights, for example)
● imposing unreasonable
restrictions or obligations on
the consumer
● being unclear or difficult to read
Next steps
● See Describing Goods And
Services, page 48
● For more information read:
A Trader’s Guide To The Civil
Law Relating To The Sale And
Supply Of Goods And Services.
Contact your local Trading
Standards office or
www.tradingstandards.gov.uk
Unfair Standard Terms. Contact
0800 389 3158; www.oft.gov.uk
Special rules for shops
Shops must comply with a
number of rules in addition to
the regulations laid down by
consumer-protection authorities
detailed above
You may need a licence,
dependent upon the type of retail
business you choose to run.
Pet shops and sex shops must
apply to their local authority
for a relevant licence. Licence
fees vary. Restaurants, shops
and mobile shops selling food,
massage services and businesses
that pierce the skin (including
tattooing, acupuncture, cosmetic
piercing and electrolysis)
generally need to register
with their local authority
environmental health department
or apply to it for a licence.
If your retail business will lend
money, offer or arrange credit,
hire, lease or rent out goods,
you will also require a consumer
credit licence, issued by the Office
of Fair Trading.
You must clearly mark the
price of the products you sell,
whether this is from a shop or via
distance sales such as mail order.
Prices may be marked either
on the product itself or close to
it so a consumer can easily see
and understand it. They must be
unambiguous, easily identifiable
and clearly legible to consumers.
If you sell goods by quantity
or weight, you must also show
the unit price. This is usually the
price per kilogram or per litre,
but for some specific products
different quantities are used —
most commonly 100g or 100ml.
They are set out in the Price
Marking Order 2004.
Prices shown must be in
sterling and inclusive of VAT and
any other taxes.
The price-marking
regulations do not apply to
services or products supplied
as part of a service (such as
shampoo used by a hairdresser).
Shops smaller than 280 square
Trading regulations
and data protection
metres are exempt from
displaying unit prices but must 51
show selling prices.
Shops larger than 280 square
metres may not open for longer
than six continual hours between
10am and 6pm on a Sunday, nor
at any time on Easter Sunday.
Next steps
● See Describing Goods And
Services, page 48
● See Terms And Conditions Of
Sale, page 48
● For advice and information about
price indications contact your
local Trading Standards office or
www.tradingstandards.gov.uk
Distance selling
There are some extra rules
if you sell goods or services
to consumers by mail order
(including catalogue shopping),
phone, fax, Internet or digital TV.
But they don’t apply to contracts
with other businesses or for
financial services
Consumers must be provided
with clear and comprehensible
information to help them decide
whether to buy. You must
make clear:
● your business’s name and,
if payment is required in
advance, your postal address
● description of the goods or
services
● price, including all taxes
The No-Nonsense Guide
 Advice in Scotland
Business Gateway in Lowlands
(0845 609 6611;
www.bgateway.com);
Highlands & Islands Enterprise
(01463 234171; www.hie.co.uk)
● delivery costs if applicable
52 ● arrangements for payment
● arrangements and date
for delivery of goods or
performance of services
(within 30 days of the order if
no date is specified)
● information about the right to
cancel the order
● how long the price or offer
remains valid
● minimum duration of a
contract to supply goods or
services continuously (eg
mobile phones) or recurrently
(such as a monthly book club)
● the cost of any premium-rate
lines customers have to use
You must also specify if you want
to offer substitute goods if those
ordered aren’t available and, if
this is the case, make it clear you
will meet the costs if any such
goods are returned.
When an order has been
placed, you have to provide the
customer with confirmation
of this information by durable
means such as post, fax or email
unless they’ve already been
given it (in an advertisement or
catalogue, for instance).
You must also include
information on when and how the
customer can cancel the order,
who will be responsible for the
costs if goods are returned, a
full postal address where they
can contact you and details of
any after-sales services and
guarantees. This has to be done
by the time goods are delivered
or, for a service, before or during
its performance.
The No-Nonsense Guide
}
With some exceptions, the
customer has a cooling-off period
of at least seven working days
during which time they can cancel I had to ensure our terms
the order for any reason: they
and conditions, privacy
must give you notice by durable
means such as post, fax or email.
policy and returns policy
For goods, the seven days were all clearly listed on
runs from the day after they or the website. I got help from
the information are received, my local Business Link and
whichever is later. The position other Government websites
is more complicated with
~
services. The cooling-off period
generally runs from the day
after the contract date or after
the information is received,
whichever is later, but there
are exceptions depending on
what has been agreed with the
customer (see the guidance listed
in Next steps below).
Businesses which provide a
service which lasts for more than
one year or has no specified end
date (providing cable television,
for example) also have to
send details on when and how
customers can end the contract. Lia Bottas
If your business uses cold- Heaven Sent Babycare
call selling over the phone, you Internet retailer
or your employees must clearly
Bournemouth
state the business’s name and
the commercial purpose of the
call at the beginning.
Additional specific rules
apply if you sell electronically
— via the Internet or email or
through mobile phones or digital
television, for example.
Next steps
● See Selling And Marketing
Electronically, below
● For more information read:

Home Shopping — Distance
Selling Regulations (OFT 698).
Contact 0800 389 3158;
www.oft.gov.uk
Selling and marketing
electronically
Businesses that sell or promote
products or services online must
provide potential customers
with a range of information and
protect their privacy
If you advertise or sell goods or
services to consumers online
—over the Internet, by email,
on interactive digital television
or using mobile-phone text
messages — you must:
● provide customers and
potential customers with the
full name and contact details
of your business, including an
email address
● give your VAT number if
applicable
● give a clear indication of prices
if you refer to them, together
with details of any associated
taxes and delivery costs
If you use electronic
communications promoting
goods and services — such as
marketing emails — you must:
● make sure they’re clearly
identifiable as commercial
communications
● clearly identify the person or
organisation on whose behalf
they have been sent
● for unsolicited emails to
consumers, sole traders or
unincorporated partnerships,
you must obtain the recipient’s
prior consent unless you
collected their email address
during a previous sale or
negotiation, are marketing
‘similiar products and services’
and the recipient had the
opportunity to opt out when
their details were collected
● enable recipients to identify
unsolicited commercial emails
immediately
● provide a valid email address
recipients can use to opt out
from your marketing mailings
● clearly identify any discounts
or promotions and any
qualifying conditions that apply
● include information about
membership of professional
bodies (such as CORGI) if
applicable
Mobile-phone text messages
are likely to be too short for all
necessary details — in this case you
can direct customers to information
on your website instead.
If you enable customers to
place orders online, you must:
● clarify what steps are involved
to conclude a contract
● give customers the chance to
check their order and correct
any errors before placing it
● acknowledge receipt of any
orders electronically and
without undue delay
● make sure customers can
store and reproduce any terms
and conditions you supply
You must also give users of your
Trading regulations
and data protection
website the opportunity to refuse
cookies. 53
Data-protection rules prohibit
you from revealing recipients’
email addresses in emails being
sent to a bulk mailing list. Putting
recipients’ addresses in the bcc
field of your email software can
prevent this.
Businesses selling online
must also comply with rules on
distance selling.
Next steps
● See Distance Selling, page 51
● Further informatioin is available
in the DTI publication Complying
With The E-Commerce
Regulations 2002 (URN 02/1132).
Contact 0845 015 0010;
www.dti.gov.uk/publications
● For more information read:
Guidance To The Privacy And
Electronic Communications
Regulations 2003.
Contact 01625 545 745;
www.ico.gov.uk
Accepting credit and
debit cards
Accepting credit and debit cards
will mean opening a different
type of bank account to receive
payments
You must open a merchant
account with an ‘acquiring bank’
if you want to accept credit
or debit card payments from
customers — whether in person,
The No-Nonsense Guide
 over the Internet, in writing or by
54 phone or mail order. There are
nine acquiring banking groups
in the UK — mostly well-known
high-street names.
You will need to establish
suitable procedures and take
advice from your acquiring bank
to minimise the risk of fraud. You
should be on your guard against
accepting stolen or counterfeit
cards or fraudulent transactions,
especially when the customer is
not present for the transaction.
Next steps
● More information on card
security and fraud prevention
is available from Association
for Payment Clearing Services.
Contact 020 7711 6200;
www.apacs.org.uk;
www.cardwatch.org.uk
Getting paid on time
The law discourages people
from settling up late by allowing
you to charge late-payers more.
And there are other options you
may consider if getting payment
proves to be a problem
If another business pays you later
than agreed, you have the right
to claim interest on the overdue
amount. Unless your terms
and conditions or invoices state
otherwise, payment will be due
after 30 days. Interest on overdue
bills should be calculated daily
The No-Nonsense Guide
at the Bank of England base
rate plus 8 per cent.
You can also claim
compensation if you wish. You
can claim £40 for debts under
£1,000, £70 for debts between
£1,000 and £9,999 and £100 for
debts of £10,000 or more. It is not
compulsory to charge interest or
debt-recovery costs.
You can challenge customers
who attempt to impose terms and
conditions that remove your rights
to claim interest or compensation.
Businesses with fewer than 250
employees can ask a representative
body such as a trade association
to go to court on their behalf to
challenge such terms.
While the law tries to offer a
remedy for late payment, good
credit-management procedures
will be more effective in the long-
term, significantly boosting your
cashflow and preventing late
payments in the first place.
Next steps
● The Better Payment Practice
Campaign offers an online
interest calculator, standard
letter templates and guidance
on the law. Contact
www.payontime.co.uk
● For more information read:
Better Payment Practice: Your
Guide to Paying and Being Paid
On Time (URN 04/606).
Contact 0845 015 0010;
www.dti.gov.uk/publications
● Business Debtline offers free
help and advice on cashflow
problems. Contact 0800 1976026;
www.bdl.org.uk
Court action for debts
Court action may be a last resort
if another individual or business
fails to pay you
Court action should not be
undertaken lightly. Before going to
court you are required to consider
using alternative dispute resolution
to reach agreement — failure to
do so may increase the amount of
costs you have to pay.
Before you start court action,
you should carefully weigh up
how likely you are to win your
case and how much money the
person or business you take to
court will have. If they have no
money or assets, there is nothing
a court can do to make them
pay you. Even if your non-paying
customer is a limited company, it
may in itself have no assets. It is
advisable to get professional help
before you launch legal action.
Small businesses can get free
legal advice through the Lawyers
for Your Business scheme (see
Next steps below).
If you take someone to court
for less than £15,000, you need
to use the county court. Amounts
above £15,000 can be dealt with
in the county court or High Court.
For debts of less than £15,000,
you start the process by obtaining
a Claim Form N1 from your
local county court. You have
to pay a fee and return it with
the completed form. The cost
depends on the amount you are
claiming. The court will then

Advice in Wales
Business Eye (08457 96 97 98;
www.businesseye.org.uk)
post a copy to the person you are
taking action against.
They can then take three
courses of action — admit they
owe you the money, argue that
they don’t owe you the money or
ignore the claim entirely.
If they admit responsibility
for the debt, you will need to fill
in Form N205A or N225 for the
court to enter a judgment that
will tell them to pay. If they deny
liability for the debt, you will
receive a questionnaire from the
court that you must fill in before a
hearing or trial is organised.
If you do not receive a reply,
you can ask for judgment to be
entered in your favour.
You will have to pay all your
legal fees while you are making
a claim, but if you win, the
court may order whoever you
have taken to court to repay a
proportion of your costs as well
as what they owe you. However,
only limited costs will be repaid
on claims of less than £5,000
dealt with on the court's small-
claims track.
Next steps
● Lawyers for Your Business
offers 30 minutes’ free advice. To
find your nearest participating
lawyer, contact 020 7405 9075;
www.lfyb.lawsociety.org.uk
● For further information about
county court claims contact
www.hmcourts-service.gov.uk
● The Court Service can tell
you where your nearest
county court is. Contact
www.hmcourts-service.gov.uk
Trading regulations
and data protection
}
55
Preventing money
laundering
Getting paid on time is
all down to having the
Certain businesses – including
right manner dealing with those which accept large cash
customers, maintaining a payments – must take steps to
professional but friendly avoid money laundering
image — and consistently
pursuing the money Businesses which must put anti-
money-laundering procedures in
~
place are:
● money service businesses
— bureaux de change, money
transmitters and third-party
cheque cashers
● high-value dealers —
businesses that deal in goods
and accept (or are prepared to
accept) in cash the equivalent
of 15,000 euros or more
(£10,000 approximately) for any
single transaction
Businesses affected must:
● register with HM Revenue &
Pauline Edwards Customs
Pauline Edwards Transport ● pay an annual fee based on the
Limited number of premises through
which they trade
Leicester
● report changes during the
registration year
● train staff in preventing money
laundering
● verify the identity of certain
types of customers
● keep records of customers and
transactions for at least five
years
● set up procedures to report
and identify suspicious
transactions
The No-Nonsense Guide

Next steps
56
● Get further guidance from
HM Revenue & Customs.
Contact 0845 010 9000;
www.hmrc.gov.uk
Insuring against
liabilities
Sometimes things do go wrong
and it may be worth insuring
yourself and your business
against any damage caused to
your customers or the public
Most businesses are not obliged
to insure against the effects of
any harm they may cause to
customers or the public — but it
is advisable.
Public liability insurance
covers claims made following an
incident related to your business’s
property, premises or staff.
Product liability insurance
protects against claims following
incidents caused by products
you sell.
Professional indemnity
insurance covers businesses that
offer professional services or
advice against any legal action
launched by a customer.
Next steps
● Talk to your insurance broker
or company or financial adviser
about the usefulness of liability
and indemnity insurance
The No-Nonsense Guide
Advice in Northern Ireland
Invest Northern Ireland
(028 9023 9090; www.investni.com)
}
Data protection
In my shop, I have a sign
If you hold information on paper
that says that refunds are or in electronic form about
only offered with a proof employees, customers, potential
of purchase and on unworn customers, suppliers or other
merchandise. I need to business contacts, what you do
do that to protect myself with it is covered by the law
and comply with the
The Data Protection Act covers
regulations too the ‘processing’ of any personal
~
information — which means
obtaining, holding, retrieving,
disclosing, erasing or destroying it.
The Act covers information held on
computers and in certain manual
filing systems.
Businesses which process
information using computers
— or which use CCTV equipment
— generally have to notify the
Information Commissioner of the
information they’re collecting,
and for what purpose. Notification
costs £35, and must be renewed
annually. But many businesses
Lee Sylph will not need to notify. You’ll
Amanda Lee be exempt if you only process
people’s personal information
lingerie retailer
for a limited number of business
Tyne and Wear activities. These are:
● staff administration
— processing information
for personnel purposes such
as hiring, paying, managing,
disciplining and dismissing staff
● advertising, marketing and
public relations activities
relating to your business or its
goods or services; you keep
this exemption even if you buy
in information for marketing
purposes

● accounts and records: this
covers keeping information on
past, existing or prospective
customers and suppliers
necessary to help you keep
your accounts, make decisions
about whether to do business
with a particular customer or
supplier (except data obtained
from a credit reference agency)
and make financial and
management forecasts
Even if you don’t need to notify,
you must still comply with the
Data Protection Act. These laws
are presented as a series of
‘principles’. The principles say
that information must be:
● fairly and lawfully processed
● processed for limited purposes
and not in any way that is
incompatible with those purposes
● adequate, relevant and not
excessive
● accurate
● not kept for longer than
necessary
● processed in line with the
rights of the person that the
information is about
● secure
● not transferred to countries
that do not have adequate
protection of data
To comply with the principles,
you must only collect the
information you need. Work out
exactly what information you
need, and about whom. Inform
the individuals concerned who
you are, why you want the
information and what you’re
going to do with it.
Make it clear if you intend to
give the information to anyone
else — this can be a specific
third party or a more general
description such as ‘other
companies’ or ‘suppliers’. Your
standard documentation must
provide this information and give
people the chance to opt out of
having their personal information
processed.
Make sure information
is accurate and up to date.
If an individual tells you the
information you hold on them is
inaccurate, consider correcting it
and advise the individual of your
intentions. Delete information
you no longer need. Keep it
securely — make sure any rooms
and IT systems in which you
keep personal information are
secure and train staff in good
information-handling practices.
You may also have to provide
individuals with a copy of
information you hold about them
if they make a written request
for it (known as a 'subject access
request'). You can charge a fee
of up to £10 for providing this
information. It must be sent
promptly to the individual in
an easily understandable form
— and in any event within 40 days
of receiving the request. Give
details of why you’re processing
their information, anyone it may
be passed to and any information
you have about the source of the
information.
Do not use an individual’s
personal information for direct-
marketing purposes if they ask
you not to do so.
Trading regulations
and data protection
Do not transfer information to
a country outside the European 57
Economic Area (the European
Union countries plus Norway,
Iceland and Liechtenstein) unless
you are sure the country has
adequate data-protection laws or
you have the individual’s consent.
You must take particular
care with sensitive information
covering areas such as a person’s
racial or ethnic origin, political
opinions, religious beliefs or
beliefs of a similar nature, trade
union membership, physical
or mental health or condition,
sexual life, any actual or
suspected criminal offence and
any proceedings being brought in
connection with this.
Such information can only be
processed in a limited range of
circumstances, including where:
● the person involved has freely
given explicit written consent
to its use for clearly stated
purposes
● it is required for legal reasons
● it is needed for ethnic or anti-
discriminatory monitoring
Next steps
● For more information read:
Getting It Right — A Brief Guide
to Data Protection For Small
Businesses.
Contact 01625 545 745;
www.ico.gov.uk
● Check whether you have to
notify with the Information
Commissioner’s notification line.
Contact 01625 545 740
The No-Nonsense Guide
 Taking on your first employee is a big step. But the legal requirements, explained here,
can help you think about the recruitment and appointment process and focus on what’s
best for your business
Recruiting your
first employee
58
How to recruit and
select employees
You have to make recruitment
decisions in a fair and non-
discriminatory way
You must not discriminate against
a candidate on grounds of race,
sex (which includes marital status,
same-sex civil partnership and
gender reassignment), sexual
orientation, disability, religion
or belief at any stage of the
recruitment process — from job
advertisements and application
forms to interview questions and
the contractual terms you offer.
From October 2006, discrimination
on grounds of age will also be
prohibited.
There are a few limited
exceptions to the anti-
discrimination rules — for
example, some restaurants
that serve food in a particularly
authentic setting may be allowed
to recruit from particular racial
groups. Also, with care work,
it may be necessary to appoint
someone of a particular sex for
reasons of privacy and decency.
It is best to get advice if you
intend to apply an exception.
While asking about a
candidate’s experience outside
the workplace can be helpful if it
relates directly to the job, it can
be unlawful to stray into areas
concerning a person’s personal
circumstances, such as their
marital status.
Be careful what you write
The No-Nonsense Guide
in interview notes. Under data
protection laws, candidates may
have the right to see any notes
made during the interview.
When obtaining references,
don’t ask for information unrelated
to the person’s ability to do the job
or conjecture about the applicant.
Next steps
● See Workers With Disabilities,
page 71
● For more information read:
Recruitment And Induction.
Contact 08702 42 90 90;
www.acas.org.uk
● For information and advice on
equal opportunities legislation
and best practice, contact
Equality Direct: 0845 600 3444;
www.equalitydirect.org.uk
● The Disability Rights
Commission can advise on
disabled people’s rights. Contact
08457 622 633; www.drc-gb.org
● For information about age
discrimination, contact Age
Positive: 0114 267 7228;
www.agepositive.gov.uk
Eligibility to work in
the United Kingdom
It is a criminal offence to
employ someone who is not
entitled to be in the UK and
to do the work in question.
There is a range of documents
you can ask for as proof of
eligibility to work
Certain valid documents are
sufficient on their own to prove
a new recruit’s eligibility to work
in the United Kingdom. These
include:
● a British passport
● a passport from another country
with an endorsement certifying
a right of abode in the UK
● a passport or national
identity card of a European
Economic Area (EEA) country
or Switzerland. The EEA
consists of the European Union
(EU) countries plus Iceland,
Liechtenstein and Norway.
Unless exempt, nationals of
eight of the new EU member
states — the Czech Republic,
Estonia, Hungary, Latvia,
Lithuania, Poland, Slovenia
and Slovakia — must also
register with the Home Office’s
worker registration scheme.
Employers must check workers
have registered within one
month of starting work
● a passport or other travel
document endorsed to show
the holder is allowed to stay in
the UK and do the type of work
you are offering, if they do not
have a work permit (see below)
● a UK residence permit issued
to an EEA or Swiss national
● a passport or other document
endorsed to show the holder
has a right of residence in the
UK as a family member of an
EEA or Swiss national who is
resident in the UK
● an asylum application
registration card (ARC) stating
the holder is allowed to take
employment.

A document stating the
candidate’s name and permanent
National Insurance number
— such as a P45, P60, National
Insurance card or letter from
a government agency — only
counts as proof of eligibility to
work if presented together with
one of the following:
● a full birth certificate issued
in the UK, or a birth certificate
issued in the Channel Islands,
Isle of Man or Ireland
● a certificate of registration
or naturalisation as a British
citizen
● a Home Office letter or
Immigration Status Document
indicating a right to stay and
work in the UK.
A work permit issued by Work
Permits UK is proof of eligibility if
presented with:
● a passport, travel document or
Home Office letter showing
the holder is able to stay in
the UK and take up the work
in question.
You must take reasonable steps
to ensure documents relate to the
person in question. Keep copies
of them as proof you haven’t
employed someone illegally.
Next steps
● For more information read:
Changes to the Law on
Preventing Illegal Working.
Contact the Employers' Helpline:
0845 010 6677;
www.homeoffice.gov.uk
}
It’s essential to have a
contract of employment for
new employees. When we
started recruiting I took
advice from a friend who
was already in business and
modelled our contract on
the one she’d developed
~
Sue Evans
Willow Farm Holidays
Skegness, Lincolnshire
Recruiting your
first employee
Check for changes in the law
Regulations, figures and sums
of money may have changed since
publication. Update check:
0845 600 9 006
www.businesslink.gov.uk/figures
59
Drawing up
employment contracts
An employment contract
exists as soon as a job offer is
accepted, even if it isn’t written.
The terms of the contract can be
written, spoken or implied by the
nature of the job being offered
— or a combination of all three.
But you must give employees a
written statement setting out the
main terms and conditions
When a job candidate accepts
your offer of employment
— which can be made orally or in
writing — you have then entered
into an employment contract. The
contract can be conditional —
perhaps depending on references
or a medical examination.
If you expect the person to be
working for you for one month
or more, you must draw up a
written statement which sets
out some of the main terms and
conditions of the employment
contract. Give it to the employee
within two months of their starting
to work for you. Keep a copy for
your own records — while it is not
a contract in itself, it can provide
evidence of the terms of the
contract if a dispute arises.
The written statement must
include:
● your business’ name and the
name of the employee
● the date their employment with
you began
● the date on which the
employee’s period of
The No-Nonsense Guide
 It worked for me
How I
recruited
my first
employee
Soji Fagade is a co-founder
of Sabo Foods Limited, a
wholesaler of specialist
60 foods. Incorporated in 1994,
the company took on its first
employee two years later
}When we realised we needed
to take on someone we rang
the JobCentre and they sent
us people to interview. The
one expectation we had was
that people would work as
hard as we did, which made it
important that we found the
right person for the job.
A lot of that was found out
at the interview. You can tell
from the sort of responses
people give, but I knew to steer
clear of certain discriminatory
questions such as sexual
preference.
I was aware of all the equal
opportunities legislation. For
example, we’d had to be careful
in wording our advertisement.
We were looking for someone
who was strong, for loading
and unloading our vans, and
many females won’t want that
sort of job. But we didn’t say
we wanted a man. We just said
what the job involved.
As we took on only one
The No-Nonsense Guide
person to start with there weren’t
so many regulatory hurdles to
leap. Getting PAYE right was an
issue but I’m not one to whine
and moan. I just got on with it.
I called up HM Revenue
& Customs and told them I was
taking on someone. They sent
me an employer’s pack and that
had all the forms I needed to fill
out and told me what I needed to
do to work out the pay. There are
all these tables you have to look
through but I taught myself how
to do it. It wasn’t difficult.
Payroll is such a specialist
thing that I do it mostly myself.
You have to get to grips with
tax code changes and the like but
now we have special accounting
software that sorts it automatically.
When we first took people on,
we gave a letter confirming their
appointment, giving the hourly rate
and their commencement date.
We then had contracts of
employment drawn up by a
solicitor who questioned me
Express Newspapers
Soji steered clear of the
interview pitfalls
about the kind of work we do,
how we pay our staff and the
hours they do — and I took
advice on new legislation,
such as the Working Time
Regulations, and the holiday
pay and other rights that part-
time workers now have.
I knew there had been
changes in legislation and
wanted to be au fait with the
developments. I feel a lot more
at ease now we have proper
contracts.
~
Sabo Foods Limited
London
Tel 020 8443 4400
www.sabofoods.com

You also need business advice
This guide covers regulations. You
should also read a guide to general
business advice — from market
research to writing a business plan
continuous employment
began. This is usually the date
they started with you. But
if, for example, you bought
your business from their
previous employer, continuous
employment runs from when
they started with that employer
● how much the employee is
paid, and at what intervals
(weekly or monthly, for
example)
● the employee’s working hours
and holiday entitlement
● a job title or a brief job
description
● the place of work. If the
employee is required or
allowed to work in more than
one place, the statement
should indicate this and give
the employer’s address
● the length of notice you and
the employee must give to end
the employment
● how long the job is expected to
last if it is not permanent; the
date it will end if it is a fixed term
● details of any collective
agreements made between
you and the employee’s
representatives, such as a
trade union, which directly
affect their terms and
conditions.
Some details can be set out
either in the written statement
or in separate documents (such
as a job offer letter or a company
handbook) which the statement
refers to and which the employee
can get hold of easily. These
include:
● details of sick leave and sick
Recruiting your
first employee
pay entitlements
61
● any pension entitlement Changes to
● disciplinary rules, including
employment contracts
who in the company the
employee should contact if
they want to appeal against a You’ll need to get the employee’s
discliplinary decision or if they consent if you want to change
have a grievance, how to go their employment contract
about it and what further steps
— if any — will follow. If you want to make changes to
an existing employment contract,
Some terms of the contract you must discuss and agree
are implied and don’t need to them with the employee or their
be written into the contract. representative.
For example, you must provide You must inform the employee
a secure, safe and healthy in writing within a month of any
working environment, while resulting change made to the
your employee must serve you details of the written statement.
honestly and faithfully.
Your business’ custom and Next steps
practice — the way staff are
normally treated — may form ● Read: Contracts Of Employment
part of the contract. For example, — Changes, Breaches Of
if your redundancy payments are Contract And Deductions From
usually above those set by law, all Wages (URN 06/532). Contact
employees may come to expect www.dti.gov.uk/publications
the same treatment.
Some terms — such as the
right to receive a minimum wage
— are automatically imposed by
law.
Next steps
● See Length Of The Working
Week, page 65
● See Paid Annual Leave, page 67
● For more information read:
Written Statement Of
Employment Particulars:
Guidance (URN 06/543). Contact
www.dti.gov.uk/publications
Contracts Of Employment
(ACAS/S02). Contact
08702 42 90 90; www.acas.org.uk
The No-Nonsense Guide
 You may be worried about your additional responsibilities when you employ people. But
our step-by-step guide provides an organised and low-stress approach to building a strong
relationship with your employees and increasing your business’s chance of success
Understanding
employees’ rights
62
Insuring your
employees
You must insure against any
claims arising from illnesses,
diseases or injuries your staff
may pick up as a result of
working for you
Employers’ liability insurance,
which protects your business
against claims from employees
for accidents or sickness they
may suffer as a result of working
for you, is a legal requirement.
The statutory minimum cover is
£5 million and you should display
the certificate in any place of
work. Keep your certificates
even after they have expired
— employees could make a
claim many years after they have
worked for you.
Next steps
● If you are an employer, you must
purchase employers’ liability
insurance
● For more information read:
Employers’ Liability (Compulsory
Insurance) Act 1969: A Guide
For Employers (HSE40). Contact
0845 345 0055;
www.hsebooks.co.uk
The No-Nonsense Guide
Workers and
employees
All employees are workers, but
not all workers are employees.
Many rules, regulations and
rights apply only to employees,
but some apply to all workers.
An ‘employee’ is someone who
works for you under the terms
of a contract of employment,
whether it is written down,
agreed orally or implied by the
nature of the relationship.
A ‘worker’ is any person who
works for you, whether under
a contract of employment or
not, who provides a personal
service — eg a short-term
casual worker, agency worker
or some freelance workers.
In terms of the rules and
regulations in this section,
genuinely self-employed
people or businesses to whom
you subcontract are not usually
defined as ‘workers’.
Where ‘workers’ are referred
to in this guide, everyone
working for you who isn’t
self-employed or employed by
someone else is entitled to the
employment rights in question.
Next steps
● Check whether freelances,
agency workers or any other
individuals are classified as
workers or not
The national
minimum wage
Nearly everyone who works for
you is entitled by law to receive
a minimum level of pay — the
national minimum wage.
Bonuses and incentive payments
count towards the minimum
wage — but not overtime or
shift-work premiums
You must pay anyone who works
for you at least the national
minimum wage. This typically
includes agency and casual
workers as well as employees who
have a contract of employment.
There are some exemptions for
young people who are undertaking
approved apprenticeships.
The rates current from
October 1, 2005 are:
● £5.05 an hour for those
aged 22 or over (£5.35 from
October 1, 2006)
● £4.25 an hour for people
aged 18 to 21 (£4.45 from
October 1, 2006)
● £4.25 an hour for anyone aged
22 or over who is with a new
employer and receiving accredited
training in the first six months
of a new job (as of October 1
2006 this ‘development rate’
ceases to exist).
● £3.00 an hour for workers aged
16 and 17, who are above the
age of compulsory schooling
(£3.30 from October 1, 2006).
When calculating whether you’re
paying the minimum wage,

you can take into account any
incentive or performance-related
payments, bonuses and tips paid
through the payroll.
But extra money above basic
pay — such as overtime or shift-
work premiums — doesn’t count.
No benefits other than
money can be included, apart
from a small amount for
accommodation.
For workers on a wage or
salary, the number of hours
worked will generally be clear.
Output workers — including
homeworkers ­— paid to do set
tasks must either be paid at least
120 per cent of the minimum
wage for the average hours
needed to complete a block of
work, or paid the minimum wage
for every hour they work.
You will need to keep records to
prove you are complying. Workers
can ask to see them if they think
they are being underpaid.
If most of your staff have
earnings well above the minimum
wage, you probably won’t need to
keep any specific records beyond
those you already keep for PAYE.
As of October 1 2006
apprentices aged over 26 are
exempt from the national
minimum wage for the first 12
months of their apprenticeship.
Next steps
● The National Minimum Wage
Helpline can provide further
information. Contact
0845 6000 678; www.dti.gov.uk/
employment/pay/national-
minimum-wage/index.html
}
Potential employees are
given a day’s trial. We pay
them and everyone knows
where they stand. We find
out if we can work as a team
and then get a contract
drawn up by a solicitor
~
Shawn Taylor
Shawn Taylor Racing
racing car & motorcycle
services
Norwich
Understanding
employees’ rights
Check for changes in the law
Regulations, figures and sums
of money may have changed since
publication. Update check:
0845 600 9 006
www.businesslink.gov.uk/figures
63
Staff who are
off sick
Staff who can’t work for four
days or more because of illness
are entitled to a minimum level
of sick pay. You can claim some
of the money back from HM
Revenue & Customs if your
business’ sick pay exceeds a
set level
You must pay statutory sick pay
(SSP) to employees who can’t
work for four or more calendar
days in a row because of physical
or mental illness or disablement.
The rate in the tax year 2006-07
is £70.05 a week.
All full- and part-time
employees and agency workers
who are employees for National
Insurance purposes, aged
between 16 and 65, qualify for
statutory sick pay provided they
earn more than the National
Insurance lower-earnings limit,
which is £84 a week (2006-07
tax year).
But you can withhold statutory
sick pay if the employee has
recently drawn incapacity benefit
or severe disablement allowance
or is in custody.
If your own arrangements are
more generous than the
statutory sick pay scheme you
can opt out. But you must keep
detailed records.
Statutory sick pay is subject
to income tax and employees’
National Insurance contributions.
It is payable for up to 28 weeks
The No-Nonsense Guide
 You also need business advice

This guide covers regulations. You

should also read a guide to general
business advice — from market
research to writing a business plan

for any one period of sickness
64 or series of linked periods of
sickness.
You may be able to recover
some SSP by deducting this
money from the National
Insurance contributions you pay
to HM Revenue & Customs (and
from income tax if necessary).
Details of what you can claim
back are contained in the HM
Revenue & Customs booklet What
Arranging employees’
pensions
If you have got five employees
or more, you may need to
offer employees access to a
stakeholder pension scheme.
The business is not required
to make contributions to an
employee’s scheme — but you
}
I only have one employee.
If he is off sick I pay his
normal wage rather than
statutory sick pay. It makes
sense because he is loyal
and it would be hard to find
a replacement

To Do If Your Employee Is Sick. Any
sick pay you recover has to be
recorded on forms P14 and P35
at the end of the tax year.
You must keep full records
of sick pay for three years. A
form for this purpose (SSP2) can
be obtained from HM Revenue
& Customs.
It’s also a good idea to record
sick pay paid to an employee in the
relevant column on your P11 form.
Next steps
● See Working Out Tax And NI For
Employees, page 17
● See Employees’ Pay Records At
End Of Tax Year, page 20
● For more information read:
What To Do If Your Employee Is
Sick (E14);
Employee’s Statement Of
Sickness (SC2).
Contact 0845 7143 143;
www.hmrc.gov.uk/employers
~
must deduct an employee’s
contributions from their pay if
they ask you to
You are exempt from having
to offer a stakeholder pension
scheme, even if you employ five
or more people, if:
● they all earn less than the
National Insurance lower
earnings limit
● you offer access to an
occupational pension
scheme which all employees
can join within a year of
starting work Charlie Allen
● you offer to pay a contribution Allen & Allen Limited
of at least 3 per cent of tailor
employees’ basic pay to a
London
personal pension scheme and
to deduct their contributions
if requested. The scheme
shouldn’t penalise members
who stop contributing
If you aren’t exempt, you must
choose a stakeholder scheme
which is registered with the
Pensions Regulator.
You should consult employees
about your choice and then write
to the scheme provider to say
you have formally chosen their

The No-Nonsense Guide


scheme. Keep a copy of the letter.
Give employees details of your
chosen provider and a contact
name. You can give information
about the scheme to employees,
but you mustn’t advise them
about its financial benefits.
Employees aren’t obliged to
sign up to the scheme. Tell staff
you can take their contributions
from pay through PAYE but that
they can pay directly into the
scheme if they prefer.
You must deduct employees’
contributions from pay if asked
to do so and forward them to the
scheme provider. Keep records of
the payments.
Employers don’t have to make
contributions.
Next steps
● For more information contact
0870 606 3636;
www.thepensionsregulator.gov.uk
● For more information read:
Stakeholder Pensions — A Guide
For Employers (PME1). Contact
0845 60 60 265;
www.thepensionservice.gov.uk
Length of the working
week
Rules on working time fix the
maximum average working
week for most workers at 48
hours. Some workers can agree
voluntarily to forego this limit
— but you mustn’t put pressure
on them to do so
For calculation purposes,
hours are averaged over a 17-
week period, though this can
be extended by agreement.
This reference period must not
include time spent on holiday or
sick leave. For instance, if two
days are lost due to sickness the
minimum reference period is 17
weeks and two working days.
Some workers can voluntarily
agree to waive the 48-hour limit
— but you mustn’t force or put
pressure on them. You must ask
those who do opt out to sign a
written agreement.
Drivers and employees
travelling with them are also
restricted to an average of 48
hours a week, and to 60 hours in
any single week. They cannot opt
out of this.
Work-related training counts
as part of the working week, as
do travel as part of a worker’s
duties and working lunches. But
lunch breaks and journeys to and
from work don’t.
The limits don’t apply to those
with the freedom to choose their
own hours of work — typically
senior managers — nor to self-
employed contractors. But
freelance or agency staff paid a
regular wage or salary do qualify.
For young workers — over the
minimum school-leaving age but
under 18 — the maximum is 40
hours.
Staff have a right to 11 hours’
rest between each working day;
young workers get 12 hours.
You mustn’t force staff to
work more than six days in every
seven, or 12 days in every 14.
Understanding
employees’ rights
Young workers should get two
days off a week. 65
You need to keep records to
show you’re complying with the
48-hour limit — but you can do
this using records you already
keep for pay (a payslip quoting
hours worked, for example).
You have to keep an up-to-
date record of workers who have
waived the 48-hour limit.
Next steps
● For more information read:
Your Guide To The Working Time
Regulations (URN 06/1131).
Contact www.dti.gov.uk/
publications
Giving staff rest breaks
Workers have a right to
minimum rest breaks during
and between shifts, and a
set number of days off each
week. There are special rules
protecting young workers
Most people who work for you
— employees, freelances, casual
or agency workers — are entitled
to minimum rest breaks. Workers
must have a minimum 20-minute
rest break in each shift lasting
more than six hours. Young
members of staff (under 18) are
entitled to at least 30 minutes’
break for each four and a half
hours they work.
Staff have a right to 11 hours’
rest between each working day;
The No-Nonsense Guide
 It worked for me
How I look
after the
company
team
Robert Bell founded Evolution
Event Management in 1996. In
his first year, as a sole trader,
66 he turned over £68,000. Now
the company employs five
people and turns over £1.8m
}Organising corporate events is
very time-consuming and it’s
difficult to talk to prospective
customers while you’re doing
it. When I worked on my own,
after a big event I’d find things
would go dead. I had all these
ups and downs.
When I decided to take on
people I read a lot about it,
but I also took advice from my
solicitor. Everybody interviewed
to work here now has the same
interview, say 50 set questions.
The poor interviewee will
get grilled and roasted but
nobody can say they didn’t
get the job because they were
black, white, pink, purple, fat
or small.
People get a job offer in
the post which is subject
to references. Then every
employee gets a contract
which gives a three-month
probationary period. During
that time either side can walk
away on a week’s notice.
There are also bits in the
contract about confidentiality,
times of work and holiday
The No-Nonsense Guide
allowance — basically, everything
is documented. It’s to protect the
company but also to protect staff.
And there are clauses on our
grievance procedure, which is a
verbal warning and then a written
warning. I’ve only had to use that
once, though. That was during
somebody’s probation period, but
we still went through the proper
processes.
We run normal nine-to-five
hours in the office but an event
can mean a very long day. People
try to take quick breaks but after
an event we still give a day off
in lieu. I’ve been talking to my
solicitor about the Working Time
Regulations and at the moment
we’re fine but it’s one of those
areas we’re looking at closely. We
don’t want tired staff anyway.
When you’re in a small
business it’s amazing how many
people don’t take breaks. Time
goes quickly when you’re busy.
But it’s important you rest your
eyes from the screen or go for
a walk, and mentally you need a
break. In my view it’s not good to
be sitting at a PC for more than
Treat people as you’d like
to be treated, says Robert
an hour. We’ve got two fish
tanks so I say: ‘Go and talk to
the fish.’
You should treat people the
way you’d like to be treated.
Seats, chairs, keyboards —
they all need to be right. We use
technology a lot, so everybody
has a palm-rest and/or screen
reflectors. It sounds a small
thing but repetitive strain injury
can be a big thing.
Staff have optional gym
membership, and there’s
training available for them as
well. That’s above and beyond
what you’re required to do by
law but to me it’s an important
part of being a well-run
company.
~
Evolution Event Management Ltd
London
Tel 020 8543 3033
www.evolutionevent.com

Advice in Scotland
Business Gateway in Lowlands
(0845 609 6611;
www.bgateway.com);
Highlands & Islands Enterprise
(01463 234171; www.hie.co.uk)
young workers get 12 hours.
You mustn’t force staff to
work more than six days in every
seven, or 12 days in every 14.
Young workers should get two
days off a week.
In certain specified
circumstances, rest breaks,
rests between shifts and days off
can be accumulated and used
later. For example, this may
happen during busy peak
periods, when an emergency
crops up or where someone
works a long way from home and
wants to work longer hours over
fewer days to complete a task
more quickly.
A young worker’s entitlement
to breaks can only be changed
or not taken in exceptional
circumstances. Young workers
must not work more than eight
hours a day and 40 hours a week.
If you have a worker who
requires extra rest breaks, for
example to take medication
privately, you may be
discriminating by unreasonably
refusing.
Next steps
● See Workers With Disabilities,
page 71
● For more information read:
Your Guide To The Working Time
Regulations (URN 06/1131).
Contact www.dti.gov.uk/
publications
People working at night
There are special regulations
governing night workers’ hours
and they must also be offered a
free health assessment to check
they are fit to work at night
Night time is defined as a period
of at least seven hours between
10pm and 7am. Unless you agree
otherwise with your staff, it is
defined as the period between
11pm and 6am.
Nearly everyone who works
for you, including employees,
freelances and agency workers,
are covered by these rules.
Night workers — people
who regularly work at least
three hours during night time
— shouldn’t average more than
eight hours' work in each 24-
hour period. This is normally
calculated over 17 weeks, though
it can be extended by agreement.
If a night worker’s job involves
special hazards or physical
or mental strain, there is no
averaging — they mustn’t work
more than eight hours in any one
24-hour period.
In general, young workers
(under 18) are not permitted to
work at night — though there
are exceptions for a number of
business sectors.
You must offer workers a free
health assessment before they
start working at night and repeat
it regularly (typically once a year)
after that. This will generally be
in the form of a questionnaire,
Understanding
employees’ rights
with a medical examination
67
following if you have any doubts
about the employee’s fitness for
night work.
You must keep records of these
assessments for two years.
Next steps
● For more information read:
Your Guide To The Working Time
Regulations (URN 06/1131).
This includes a sample health
questionnaire. Contact
www.dti.gov.uk/publications
Paid annual leave
People who work for you must get
a minimum of four weeks’ paid
annual leave a year — though this
can include bank holidays
Most people who work for you,
including your employees,
freelances and agency workers,
are entitled to a minimum of four
weeks’ paid annual leave, with
part-time workers enjoying leave
proportionate to the amount of
days they work each week. You
are of course free to specify a
longer period in your employees’
contracts if you wish.
So a full-time worker who
works five days a week is
entitled to 20 days’ annual leave,
while a part-timer who works
two days a week is entitled to
eight days.
The minimum leave period can
include bank holidays. There’s
The No-Nonsense Guide
 Advice in Wales
Business Eye (08457 96 97 98;
www.businesseye.org.uk)
no automatic right to take bank
68 holidays off.
The leave entitlement starts
building up from a worker’s first
day at work. With your staff’s
agreement, during their first year
of work you can use a system
in which they get one twelfth of
their annual leave entitlement for
each month they work, rounded
to the nearest half day.
Holiday pay must be based
on the worker’s average pay. If,
for example, their normal pay
includes additional money for
working unsocial hours, so must
the holiday pay.
You should agree with staff
how much notice of leave they
should give. If you don’t have an
agreement, the notice period
should be twice the length of the
leave requested.
If someone stops working for
you, they’re entitled to be paid for
any leave they haven’t taken.
Next steps
● For more information read:
Your Guide To The Working Time
Regulations (URN 06/1131).
Contact www.dti.gov.uk/
publications
Holidays And Holiday Pay
(ACAS/AL03). Contact Acas
Publications:
08702 42 90 90;
www.acas.org.uk
The No-Nonsense Guide
Time off work other
than annual leave
There is a range of other
circumstances in which
employees will be eligible
for paid or unpaid time off
— including acting as a safety
representative, going to
antenatal appointments and
dealing with an emergency
involving a dependant
You must allow staff time off in a
number of circumstances.
If an employee is pregnant, she
is entitled to paid time off for any
antenatal appointments made on
the advice of a registered medical
practitioner, midwife or health visitor.
In other cases, you only have to
allow ‘reasonable’ time off.
You must give paid time off to
employees who are:
● carrying out duties or receiving
training as a safety representative
● carrying out industrial relations
duties or being trained as an
official of a recognised trade union
● carrying out duties as a
pension scheme trustee
● looking for another job or
arranging training for future
employment when being made
redundant
● carrying out duties or receiving
training as an employee
representative for consultation
over collective redundancies or
business transfers
● young people studying or in
training leading to a relevant
qualification.
In the following instances you
have to give employees time off
but you’re not obliged to pay
them if you don’t want to:
● taking action to deal with
an emergency involving a
dependant — a child, husband
or wife, civil partner, parent
or someone living with the
employee (other than a tenant,
boarder or employee of the
household) or someone who
reasonably relies on the
employee to arrange care.
Valid reasons for taking
time off include helping a
dependant who falls ill, is
injured or assaulted, arranging
a dependant’s funeral, a
dependant giving birth, dealing
with an unexpected breakdown
in care arrangements for a
dependant or dealing with an
incident at a school attended
by a child of the employee
● taking part in certain trade
union activities
● a range of public duties,
including acting as a
magistrate; a member of
a local authority, police
authority, a health authority
or NHS trust; a member of a
school governing body. If you
don’t release an employee
for jury service, you could be
prosecuted for contempt of
court.
If you have a worker who
requires time off for reasons
related to disability, for example
for treatment or rehabilitation,
you may be discriminating by
unreasonably refusing.

Next steps
● See Workers With Disabilities,
page 71
● Redundancy Entitlement:
Statutory Rights — A Guide For
Employees (URN 06/540); Time
Off For Dependants: A Guide For
Employers And Employees
(URN 99/1186) Contact
www.dti.gov.uk/publications
Time Off For Trade Union Duties
And Activities. Contact Acas
Publications: 08702 42 90 90;
www.acas.org.uk
Discrimination due to
race, sex, age, religion
or belief
People have the right not to
be discriminated against on
grounds of race, sex (including
being married, civil partnership
and gender reassignment),
sexual orientation, religion or
belief, and — from October
2006 — age
You mustn’t discriminate
against anyone who works for
you (including self-employed
contractors) or treat them less
favourably because of their:
● colour
● race
● nationality
● ethnic or national origin
● sex (including being married,
civil partnership and gender
reassignment)
● pregnancy or maternity leave
}
We pay our staff slightly
more than the going rate
because it creates loyalty
and we manage to get the
best staff. The better you
treat them, the better they
will treat you
~
Kingsley Jones
Icicle Mountaineering Ltd
alpine climbing courses
Deddington, Oxfordshire
Understanding
employees’ rights
● sexual orientation
● religion or belief. 69
Apart from yourself, you also have
to ensure that other managers or
members of staff don’t discriminate
against their colleagues.
In addition, the way you recruit
staff must not be discriminatory.
You must not offer less
favourable contractual terms
— including those covering pay
and benefits — to any employee
or group of employees on these
grounds. Nor must you deny
them access to promotion,
transfers, training or any other
schemes, facilities or services.
You must not dismiss an
employee on these grounds.
Under equal pay laws, you
must offer the same level of pay
to men and women doing the
same or similar work, or work of
equal value.
Any attempt at separating
people of a particular race
from other staff counts as
discrimination. You must also
avoid indirect discrimination
— where you apply a seemingly
unbiased requirement or practice
with which any of the above
categories of employee is much
less likely to be able to comply.
Examples of indirect
discrimination might be
creating new shift patterns
which make things hard for
working mothers or introducing
a uniform banning headgear
when some people wear
headwear for reasons relating
to their religious or ethnic
background.
The No-Nonsense Guide

Remember that you may
70 be held responsible for any
discrimination or harassment
practised by your employees, so
you must deal with any problems.
Discriminatory harassment
might include demeaning
remarks, graffiti, jokes, verbal
abuse or physical assault.
You mustn’t victimise anyone
who makes a complaint of
discrimination against you.
There are a few limited
exceptions to the rules — for
example, some restaurants
where food is served in a
particularly authentic setting
may be allowed to recruit from
particular racial groups. In areas
such as care work, it may be
necessary to appoint someone
of a particular sex for reasons of
privacy and decency.
It is best to take advice if
you intend to apply one of the
exceptions.
You may also take positive
action to help men or women or
members of a particular racial
group, religion or sexual
orientation compete on equal
terms when looking for work —
perhaps by running a training
course or offering work
experience. You can encourage
people to apply for work — but
you must always select the best
person for the job when recruiting.
Any benefits you offer married
employees and their spouses
— such as health insurance or
flexible working — must also be
offered to employees who are civil
partners, and to their partners.
As of October 2006,
The No-Nonsense Guide
}
The key to success with
staff is finding someone
who actually cares about
your business. It’s down to
a particular mentality — if
you get a team around you
who care and are diligent it
makes a huge difference
~
Anita Fitzgerald
Little Gatcombe Farm
farm and guest house
Gatcombe, Isle of Wight
discrimination on grounds of
age is also prohibited. It will
be unlawful to discriminate
against someone on grounds
of age in any area of the
employment relationship,
including recruitment, pay,
working conditions, training and
promotion. The new rules also
set a default retirement age of 65
and give employees the right to
request not to be retired. You can
set a lower retirement age if it is
objectively justified, but you must
consider any requests to work
past retirement.
Next steps
● See How To Recruit And Select
Employees, page 58
● Acas provides advice
and information on anti-
discrimination legislation and
best practice. Contact 08457 47
47 47; www.acas.org.uk
● For more information read:
The Commission for Racial
Equality’s Employment Code Of
Practice. Contact 020 7939 0000;
www.cre.gov.uk
Guidelines For Equal
Opportunities Employers.
Contact 0845 601 5901;
www.eoc.org.uk
● Equality Direct can offer more
advice. Contact 0845 600 3444;
www.equalitydirect.org.uk

Workers with
disabilities
You must not treat staff less
favourably on grounds of a
disability
Disability is defined as a physical
or mental impairment which
has a substantial and long-term
adverse effect on a person’s
ability to carry out normal day-to-
day activities.
You must be prepared to make
‘reasonable adjustments’ for
disabled people — changes that
would assist them to work or
continue to work for you.
Examples might include:
● making alterations to your
premises
● giving some of the disabled
person’s duties to another
member of staff
● buying special equipment
● changing the person’s
working hours.
The level of adjustment deemed
necessary will depend on
circumstances including the
resources available. Change
might not be necessary if the
adjustment would:
● make no significant difference
to the disabled person’s ability
to do the job
● not be practical
● cost more than you could afford,
particularly when there is no
financial help available to you
● contravene other legislation,
such as health and safety rules.
Advice in Northern Ireland
Invest Northern Ireland
(028 9023 9090; www.investni.com)
The way you recruit staff
(including self-employed
contractors) should not
discriminate against people with
disabilities.
You may need to make
reasonable adjustments to your
recruitment process to make
sure people with disabilities
are not disadvantaged in their
application. For example, this
may mean holding an interview
in a room that is more accessible
to a wheelchair user, removing
a requirement that people
phone in to discuss a vacancy or
providing special equipment or a
sign language interpreter for an
interview.
You must not offer less
favourable contractual terms
— including those covering pay
and benefits — to staff because
they are disabled. Nor can you
deny them access to promotion,
transfers, training or any other
schemes, facilities or services.
You must not dismiss staff
on the grounds of disability or
victimise anyone who makes
a complaint of disability
discrimination against you.
Next steps
● See How To Recruit And Select
Employees, page 58
● For more information read:
Employing Disabled People
—Top Tips For Small Businesses
(EMP5). Contact the Disability
Rights Commission:
08457 622 633; www.drc-gb.org
● The Employers’ Forum on
Disability examines issues of
Understanding
employees’ rights
disability in the workplace and
71
offers best practice advice.
Contact 020 7403 3020;
www.employers-forum.co.uk
Rights of part-time
workers
Part-time workers are generally
entitled to the same treatment
as full-timers — from the same
hourly rates of pay to access
to promotion opportunities,
pension schemes and training
You must not treat part-time
workers less favourably than
comparable full-timers — anyone
working for the same employer
doing the same or broadly similar
work. The rules cover employees,
freelances or casual workers, but
not the genuinely self-employed.
However, you may be able to treat
a part-timer differently from a
full-timer if you can show that
it’s necessary and appropriate to
achieve a real business aim.
Part-time workers should get
the same hourly rates of pay as
comparable full-timers. Overtime
rates must be the same, too
— but legally you do not need to
pay overtime rates until they have
exceeded normal full-time hours.
In addition, part-time
employees enjoy leave
proportionate to the number of
days they work each week. So if
a full-time employee who works
five days a week is entitled to 20
days’ annual leave, a part-timer
The No-Nonsense Guide

who works two days a week is
72 entitled to eight days.
You must also treat part-
timers the same as full-timers
when calculating entitlement to
maternity and parental leave and
calculating levels of sick pay and
maternity pay.
You must give them the same
access as full-time workers to
promotion opportunities and
pension schemes.
Part-timers must not be
treated unfavourably if you
are selecting positions for
redundancy.
You should not exclude people
from training because they
work part-time. Where possible,
training should be organised
when all staff can attend.
You must not victimise
part-timers who have made a
complaint of unfair treatment
against you.
Next steps
● For more information read:
Part-Time Workers: The
Law And Best Practice (URN
02/1710). Contact
www.dti.gov.uk/publications
Right to belong to
a trade union
You must not penalise workers
for joining — or refusing to join
— a trade union
You must not base recruitment
The No-Nonsense Guide
Check for changes in the law
Regulations, figures and sums
of money may have changed since
publication. Update check:
0845 600 9 006
www.businesslink.gov.uk/figures
decisions on whether or not a
worker belongs to a trade union.
Staff do not need your permission
to belong to a union.
You cannot take any other
action to prevent, penalise or
deter a worker from belonging
to a union, such as refusing to
promote them. Nor can you make
a worker join or stay in a union.
In addition, you cannot dismiss or
threaten to dismiss an employee
for being a member of a union.
If you employ more than 20
people and refuse to recognise
a union for bargaining purposes,
you may be required to do so
after a ballot or if the majority of
the relevant workforce are union
members.
Next steps
● For more information related
to trade unions read:
Union Membership — Rights
Of Members And Non-Members
(URN 06/558). Contact
www.dti.gov.uk/publications
Statutory Recognition. Contact
www.cac.gov.uk
Representation At Work
(ACAS/B15); Disclosure Of
Information To Trade Unions
(ACAS/CP02); Time Off For Trade
Union Duties And Activities
(ACAS/CP03). Contact
Acas Publications: 08702 42 90 90;
www.acas.org.uk
When an employee
is pregnant
A pregnant employee
automatically qualifies for
ordinary maternity leave. Those
with a minimum length of
service can also take additional,
unpaid leave if they wish
You must not dismiss a pregnant
employee — or single her out
for redundancy — for reasons
connected with her pregnancy,
childbirth or maternity leave. Nor
can you treat her unfairly.
Regardless of the size of your
business or the hours she works,
a pregnant employee is entitled to
a minimum standard of treatment
— though you can be more
generous if you wish.
You must give pregnant women
paid time off to attend antenatal
care appointments which may
include relaxation and parentcraft
classes attended on the advice of
a registered medical practitioner,
midwife or health visitor.
All pregnant employees are
entitled to 26 weeks’ ordinary
maternity leave, regardless
of how long they have been
working for you. If an employee
was working for you when her
pregnancy began, she is likely
to be entitled to 26 weeks'
additional maternity leave.
Many women will be entitled to
receive statutory maternity pay
during ordinary maternity leave (see
Pay On Maternity Leave, page 75).
Ordinary maternity leave can

}
We employ a lot of mothers.
We’re flexible with them
and they’re flexible with
us. While we constantly
have people on maternity
leave, it’s not a problem
and, of course, we claim
maternity pay back from the
Government
~
Heather Gilchrist
Happitots Day Nursery Ltd
Edinburgh
start any time from the 11th week
before the baby is due to be born.
A woman expecting a baby
must notify you by the end of the
15th week before the expected
week of childbirth:
● that she is pregnant
● when the expected week of
childbirth is, confirmed with
a medical certificate if you
request one
● when she intends her
maternity leave to start.
You will have to write to her
within 28 days stating when you
expect her to return to work if
she takes her full maternity leave
entitlement.
A pregnant woman keeps all of
her normal terms and conditions
except wages or salary while she
is on ordinary maternity leave.
Her holiday entitlement will
continue to build up as normal,
for example.
You must allow a woman to
return to her old job after taking
ordinary maternity leave.
If her job becomes redundant
during the maternity leave,
you must offer any suitable
alternative work available.
You must also ‘seriously
consider’ a returning employee's
request for flexible working.
Refusal to offer such an option
may amount to indirect sex
discrimination.
If a woman has worked for
you for a period of at least 26
continuous weeks by the end of
the 15th week before the baby
is due to be born, she can also
take up to 26 weeks’ unpaid
additional maternity leave.
Understanding
employees’ rights
Broadly speaking, this covers
women who were working for you 73
when their pregnancy began. The
length-of-service condition is due
to be removed for women whose
babies are due during or after
April 2007.
Only some terms and
conditions of employment remain
during the unpaid additional
leave period — relating to
compensation in the event of
redundancy, notice periods
and discipline and grievance
procedures, for example.
After additional maternity
leave, an employee is entitled
to return to the same job
unless this is not reasonably
practicable, in which case you
must offer a suitable alternative.
If a redundancy arises during
maternity leave the woman must
be offered any suitable alternative
vacancy.
If there is an unavoidable
health or safety risk to a new or
expectant mother or her baby,
and you cannot find other suitable
work for her, you must suspend
her on full pay.
It is illegal for new mothers to
return to work within two weeks
of giving birth (four weeks for
factory workers).
Next steps
● For more information read:
Maternity Rights: A Guide For
Employers And Employees
(URN 03/885X); Suspension
From Work On Medical Or
Maternity Grounds Under Health
And Safety Regulations —
The No-Nonsense Guide
 It worked for me

How family
friendly
policies help
my business
Julia Scott is co-founder of
telemarketing business Base
Connections, which offers
74 its staff flexible working so
employees can fit their jobs
around family commitments.
The business was founded in
1994 and 55 people now work
there.

}
We set up the company because
my business partner, Annetta
Snider, and I both wanted to
return to work on a part-time
basis having just had children,
but there were no suitable jobs
out there. So we set up our
own telemarketing business in
Annetta’s living room. This gave
us the flexibility to work the
hours we wanted.
The business expanded
rapidly and we soon got to the
point at which we needed to
recruit. There were a lot of
women in our area who had
taken a career break to look
after their families, but wanted
to keep doing some work.
By targeting them we were
able to attract staff with a level
of business experience that we
wouldn’t have has, if we hadn’t
offered flexible hours. Many of
Julia: family-friendly policies are
great for morale
them told us we were the only
business they had come across
that offered the sort of flexible
hours they wanted to work.
We’ve maintained a policy of
flexible working ever since. Within
certain parameters, everyone
chooses the hours and days they
want to work. Everyone has to
start by 9.30am, but if they want
to leave at 3pm they can. Staff
enjoy being able to spend more
time with their children, care for a
relative or simply avoid rush hour.
But it’s not just about allowing
people to work the hours they
want, it’s also about retaining
staff. If businesses don’t allow a
certain amount of flexibility, their
staff might burn out and become
dissatisfied.
Offering flexible working
provides us with a motivated,
loyal and committed workforce.
This in turn has resulted in
low staff turnover. In 2005, our
average length of service for a
staff member was 40 months
and staff turnover was just 22
per cent. In a large telemarketing
firm turnover is typically around
70 per cent.
We also try to help staff
manage their childcare
arrangements. There is a good
childcare scheme close to the
office and we offer childcare
vouchers to staff who want to
use it. For example, we might
pay the nursery £200 to cover an
employee’s monthly childcare
bills. This amount is then
deducted from their salary. This
means the employee pays less
tax and National Insurance,

The No-Nonsense Guide


Joeal Chant/UNP
Guidance (URN 06/549). Contact
www.dti.gov.uk/publications
Flexible Working (ACAS/AL07).
Contact Acas Publications:
08702 42 90 90; www.acas.org.uk
Pay on
maternity leave
Many pregnant women also
have the right to receive a
minimum level of pay during
their ordinary maternity leave.
You can claim most — or all
— of this money back from the
Government
so their money goes further Pregnant women and those
than if they had paid for the who have just given birth are
childcare directly. entitled to receive 26 weeks’
We’ve always been a very statutory maternity pay during
family-friendly firm. It’s good their ordinary maternity leave
for morale and staff retention. if they:
If a member of staff has to ● have worked for you for a
rush off because a child is ill or continuous period of at least
to look after an elderly relative, 26 weeks into the 15th week
they can. Most of us have been before the week the baby is
there, so we understand. due; and
● earn more than the lower
~
earnings limit for National
Insurance contributions (£84 per
week for the 2006–07 tax year).
The period of entitlement
is due to rise from 29 to 36
weeks in April 2007. The rate of
statutory maternity pay for the
Base Connections first six weeks is 90 per cent of
Woking the woman’s average weekly
Tel 0870 0131100 earnings.
www.baseconnections.co.uk For the remaining 20
weeks, a standard rate of
Understanding
employees’ rights
You also need business advice
This guide covers regulations. You
should also read a guide to general
business advice — from market
research to writing a business plan
statutory maternity pay is
payable. From April 2, 2006 this 75
rate is £108.85 a week or 90 per
cent of the woman’s average
weekly earnings, whichever is the
lower.
Statutory maternity pay
is subject to income tax and
National Insurance contributions
in the same way as normal pay.
Employers recover statutory
maternity pay from the income
tax and National Insurance
contributions they pay to HM
Revenue & Customs.
If your business’ total annual
National Insurance contributions
are £45,000 or less, you can
claim back from HM Revenue
& Customs 100 per cent of
statutory maternity pay plus a
compensation payment of 4.5
per cent. Otherwise you can claim
92 per cent of the payments you
make.
You must record maternity
payments in the relevant
sections of your P11, P14 and
P35 tax forms from HM Revenue
& Customs (see Next steps
below).
You can also use form SMP2
to keep a record of statutory
maternity payments if you
wish. This is available from HM
Revenue & Customs.
All records must be kept for
three years.
Next steps
● For more information about
statutory maternity pay read:
Pay And Time Off Work For
Parents (E15). Contact
The No-Nonsense Guide

0845 7 646 646;
76 www.hmrc.gov.uk/employers
● For further information contact
the HM Revenue & Customs
Employer’s Helpline.
Contact 08457 143 143
Paid paternity leave
Working fathers can take up to
two weeks’ paid leave following
the birth of a baby. Their pay
is set at the same level as
statutory maternity pay
To qualify, an employee must:
● have or expect to have a
responsibility for the child’s
upbringing
● be the child’s father or the
mother’s husband, civil
partner, or partner
● have worked continuously for
you for at least 26 weeks by the
end of the 15th week before
the week the baby was due and
have continued working for you
until the birth.
You can ask an employee to fill
in a self-certificating form as
evidence of their entitlement to
statutory paternity pay. You can
use the HM Revenue & Customs
form Becoming A Parent (SC3).
Fathers can take a block of
either one or two whole weeks’
leave — but not odd days.
Leave must be taken within 56
days of the child’s birth or, if the
child is born early, in the period
from the actual date of birth until
The No-Nonsense Guide
56 days after the expected week
of birth.
Employees have the right
to return to the same job after
taking paternity leave. You must
not dismiss an employee or treat
him unfairly because he has
taken paternity leave.
Working fathers are entitled
to keep their normal terms
and conditions of employment
— except those relating to wages
or salary — while taking
paternity leave.
Most fathers are entitled to
statutory paternity pay. From
April 2, 2006 this rate is £108.85
or 90 per cent of the employee’s
average weekly earnings,
whichever is lower.
Staff who earn less than the
lower earnings limit for National
Insurance contributions don’t
qualify for statutory paternity pay.
You can recover statutory
paternity pay from the income
tax and National Insurance
contributions you pay to HM
Revenue & Customs.
If your business’ total annual
National Insurance contributions
are £45,000 or less, you can claim
back all statutory paternity pay
plus a compensation payment of
4.5 per cent on top.
Otherwise you can claim 92 per
cent of the payments you make.
You should record paternity
payments in the relevant
sections of the P11, P14 and P35
tax forms available from HM
Revenue & Customs; a number
of explanatory booklets are also
available (see Next steps below).
All records must be kept for
Advice in Scotland
Business Gateway in Lowlands
(0845 609 6611;
www.bgateway.com);
Highlands & Islands Enterprise
(01463 234171; www.hie.co.uk)
three years.
Paid paternity leave is also
available to employees who adopt
a child.
Next steps
● See Paid Leave For Adoptive
Parents, page 77
● The Acas helpline can offer
advice on paternity leave.
Contact 08457 47 47 47
● For more information on paid
leave for fathers read:
Paternity Leave And Pay: A Basic
Summary (URN 06/547);
Contact www.dti.gov.uk/
publications
Pay And Time Off Work For
Parents (E15);
Statutory Paternity Pay Record
Sheet (SPP2);
Becoming A Parent: Self-
Certificate (SC3).
Contact 0845 7 646 646;
www.hmrc.gov.uk/employers
● Further information about
statutory paternity pay is
available from the HM Revenue
& Customs Employer’s Helpline.
Contact 08457 143 143
● All the relevant forms can be
ordered from HM Revenue
& Customs Employer’s
Orderline.
Contact 0845 7 646 646;
www.hmrc.gov.uk/employers
● To use an online calculator for
paternity pay, contact
www.hmrc.gov.uk/employers

}
It’s very important to keep
up to date with employment
law changes so I regularly
check the Business Link,
Department of Trade and
Industry and Acas websites
~
Sally Minns
The Old School House
Nursery
Market Weighton, E Riding
Paid leave for
adoptive parents
Employees who are newly
matched with a child for
adoption by an adoption agency
can take adoption leave if they
have worked for you for at least
26 weeks. While they are off
work, they are also entitled to
a minimum level of statutory
adoption pay
One member of a couple — or an
individual — who adopts a child is
entitled to adoption leave and pay.
The other member of a couple may
qualify for paternity leave and pay.
To qualify for adoption leave,
an employee must have worked
continuously for you for at least
26 weeks when they have been
matched with a child by an
approved adoption agency.
Employees must give you
evidence from the adoption
agency as proof of their
entitlement to adoption leave
and pay: for example, a letter
on headed paper confirming the
matching.
Adoptive parents are entitled to
up to 26 weeks’ ordinary adoption
leave. This period of leave can
start from the date of the child’s
placement or from up to 14
days beforehand. The period of
entitlement is due to rise from 26
to 39 weeks in April 2007.
Parents who take ordinary
adoption leave can also take
26 weeks' additional adoption
leave. This is unpaid unless
Understanding
employees’ rights
the employee's contract states
77
otherwise.
Some terms and conditions
of employment remain during
this period — relating to
compensation in the event of
redundancy and notice periods,
for example.
You must not dismiss
employees or treat them unfairly
because they’ve taken adoption
leave.
They are entitled to keep their
normal terms and conditions
of employment — except those
relating to wages or salary
— throughout this period.
They are also entitled to
statutory adoption pay. From
April 2, 2006 this is the lower of
£108.85 a week or 90 per cent of
the employee’s average weekly
earnings — though you can pay
more than this if you wish.
Employees with average
weekly earnings below the
lower earnings limit for National
Insurance contributions don’t
qualify for statutory adoption pay.
Employers can recover statutory
adoption pay from the income
tax and National Insurance
contributions they pay to HM
Revenue & Customs.
If your business’ total annual
National Insurance contributions
are £45,000 or less, you can claim
back all statutory adoption pay
plus a compensation payment of
4.5 per cent.
Otherwise you can claim 92 per
cent of the payments you make.
You must record statutory
adoption payments in the relevant
sections of your P11, P14 and P35
The No-Nonsense Guide

forms available from HM Revenue
78 & Customs; a number of
explanatory booklets are also
available (see Next steps below).
All records must be kept for
three years.
Paternity leave can be taken
by an adoptive parent if they have
worked for you for at least 26
weeks by the week in which they
are told they have been matched
with a child, and have continued
working for you until the child is
placed with the adopter.
Next steps
● See Paid Paternity Leave,
page 76
● The Acas helpline can advise
on adoption leave and pay for
adoptive parents. Contact
08457 47 47 47
● For more information read:
Adoptive Parents: Rights To
Leave And Pay When A Child Is
Placed For Adoption In The UK
(URN 02/1515). Contact
www.dti.gov.uk/publications
Pay And Time Off Work For
Adoptive Parents (E16);
Statutory Adoption Pay Record
Sheet (SAP2). Contact
0845 7 646 646;
www.hmrc.gov.uk/employers
● Further information about
statutory adoption pay is
available from the HM Revenue
& Customs Employer’s Helpline.
Contact 08457 143 143
● All the relevant forms can be
ordered from HM Revenue
& Customs Employer’s Orderline.
Contact 0845 7 646 646;
www.hmrc.gov.uk/employers
The No-Nonsense Guide
}
Insurance premiums
have gone up a lot and
some businesses say they
can't afford them. But it’s
important I know that if one
of my staff or customers
injure themselves on my
premises, I’m covered for
millions of pounds
~
John Wild
Packet Bridge Fish and
Chip Shop
Carnforth, Lancs
Unpaid leave for
parents
Parents can take extra, unpaid
time off during the first few
years of their children’s lives.
Generally, you agree with your
employee how this parental
leave is to be taken
Mothers and fathers have a right
to take unpaid parental leave to
look after young and disabled
children.
Parents can take 13 weeks’
unpaid parental leave for each
child. They can take leave until
the child’s fifth birthday or
until five years after they have
adopted a child. They must have
completed a year’s continuous
service with you.
Parents of disabled children
can take 18 weeks’ unpaid leave
until the child’s 18th birthday.
Employees remain employed
while on parental leave. Some
contractual terms and conditions
— such as those relating to
notice periods and redundancy
— still apply.
You must allow staff returning
from parental leave of four weeks
or less to return to the same job.
With longer periods of leave,
you must let them go back to
the same job or, if that is not
reasonably practical, to a job
with similar or better terms and
conditions.
You can agree how and when
leave is to be taken with staff
or their representatives, though

there is a fallback scheme if
there is not an agreement. Under
this, up to four weeks’ leave can
be taken in one year, in blocks of
one week at a time.
You can postpone parental
leave if you think an employee’s
absence would disrupt the
business too much — perhaps
when work is at a seasonal peak
or when an employee’s skills
are essential to the business
at a particular time. You must
discuss the postponement with
the employee and then give them
written notice. The leave can be
postponed for a maximum of six
months.
Next steps
● The Acas helpline can offer
advice. Contact 08457 47 47 47
● For more information read:
Parental Leave: A Guide For
Employers And Employees
(URN 06/567). Contact
www.dti.gov.uk/publications
Understanding
employees’ rights
Advice in Wales
Business Eye (08457 96 97 98;
www.businesseye.org.uk)
related to their disability, for
79
Employees and example to avoid travelling on
public transport during rush hour
flexible working
or because their disability means
that they work better later in the
Flexitime, job-sharing and day, you may be discriminating if
term-time working — all are you refuse this.
examples of the kind of flexible
working patterns parents can Next steps
request from you
● For more information read:
You have to ‘seriously consider’ Flexible Working — The Right To
requests to work flexibly from Request And A Duty To Consider
parents of children under six or — A Guide For Employers and
of disabled children under 18. To Employees (URN 03/524X).
make a request, parents must Contact www.dti.gov.uk/
have worked continuously for you publications
for at least 26 weeks. Where you ● For guidance read:
may have a clear business reason Changing Patterns Of Work
why the work pattern cannot be (ACAS/B09). Contact Acas
accommodated, you may refuse Publications: 08702 42 90 90;
the request. www.acas.org.uk
Flexible working includes ● See Workers With Disabilities,
working patterns such as page 71
annualised hours, flexitime,
job-sharing, shift-working and
term-time working. Or it might
simply be starting half-an-hour
later and making up the time later
in the day.
Employees have to make
a written application to work
flexibly. You are required to meet
them within 28 days to discuss
their request.
You then have 14 days to
write to the employee with your
decision. Staff have a further 14
days to appeal if they disagree
with it.
During 2007 the flexible
working rules will be extended to
cover careers of adults.
If a disabled person needs to
work different hours for a reason
The No-Nonsense Guide
 All businesses need a framework for both employees’ and employer’s conduct and procedures
for handling disciplinary, grievance and dismissal issues. Here’s the way to go about it
Resolving problems
with employees
80
Discipline and
grievance issues
Basic information on
disciplinary and grievance
issues must be included in your
employees' written statement
of employment details. All
businesses are also required to
have minimum disciplinary and
grievance procedures in place
You should draw up disciplinary
rules to set standards of conduct
at work and explain what
behaviour is unacceptable. The
rules could cover areas such as:
● timekeeping
● absence
● holidays
● health and safety
● standards of work
● personal appearance
● use of company facilities
● smoking
● discrimination.
You must include details of
disciplinary rules and grievance
procedures in your written
statement of terms and
conditions.
You must explain:
● what your disciplinary rules are
● to whom the employee should
apply if they are dissatisfied
with a disciplinary decision or
want to put right a grievance
● how to apply and what further
procedures, if any, will follow.
For the first and last of these
you can also refer employees to
The No-Nonsense Guide
a separate document that they
should be able to easily access
if these details are not fully
contained in the written statement.
Disciplinary procedures set out
the action you will take against
staff who break your rules. All
businesses have to put minimum
disciplinary procedures in place,
including the following stages:
● informing the employee in
writing of the problem
● meeting to discuss the
problem with the employee
— who has the right to be
accompanied by a fellow
work colleague or trade
union official
● after the meeting, informing
the employee of the employer’s
decision and of their right to
appeal against it
● an appeal, if the employee
requests one.
Minor breaches of rules should
be dealt with informally.
Examples of misconduct
you might deal with using your
disciplinary procedure could
include persistent lateness or
unauthorised absence.
Gross misconduct is an action
so serious that you may dismiss
an employee for their first offence
without notice or pay in lieu of
notice. In practice, however,
you should generally suspend
the employee on full pay and
investigate the incident before
dismissal. The employee should
be given a chance to put forward
their case at a meeting.
Examples of offences which
are normally regarded as gross
misconduct include: theft; fraud;
fighting; assault; deliberate
damage to company property;
being under the influence of
alcohol or illegal drugs; serious
negligence which causes
unacceptable loss, damage
or injury; serious acts of
insubordination.
A grievance procedure allows
individual workers to raise
grievances with management
about their employment. All
businesses have to put minimum
grievance procedures in place,
including the following stages:
● the employee informs the
employer in writing of their
grievance
● the employee is invited to
a meeting to discuss the
grievance — they have the
right to be accompanied by a
colleague
● the employer responds to the
grievance
● right of appeal for the employee
if they feel the grievance hasn’t
been satisfactorily dealt with.
The Acas Code of Practice on
Disciplinary and Grievance
Procedures provides practical
guidance on drawing up
disciplinary and grievance
procedures.
Next steps
● See Drawing Up Employment
Contracts, page 59
● See Acas Code Of Practice,
below
● Contact the Acas helpline:
08457 47 47 47

● Read: Producing Disciplinary
And Grievance Procedures
(ACAS/GO2); Discipline and
Grievances at Work (ACAS/H02).
Contact 08702 42 90 90;
www.acas.org.uk
The Acas Code of
Practice
The Acas Code of Practice can
help you set up your disciplinary
and grievance procedures,
making sure problems are dealt
with fairly and that employees
get the chance to put forward
their side of the story. It is also
used by employment tribunals
— so it is well worth playing it
by the book
The Acas Code of Practice on
Disciplinary and Grievance
Procedures states that good
disciplinary procedures should:
● be in writing
● state who they apply to
● be non-discriminatory
● ensure problems are dealt with
quickly
● ensure information is kept
confidential
● set out what disciplinary
actions might be taken
● state which levels of
management have the authority
to take disciplinary action
● ensure employees are
informed of complaints
against them and any relevant
evidence before a hearing
● give workers the chance to put
}
We have a discipline and
grievance policy which all
our employees receive
as part of their contract.
Luckily we’ve had no need
to use it, but it is there to
protect everyone just in
case.
~
James Burton
Gap Sports
gap-year project provider
Marlow, Bucks
Resolving problems
with employees
Check for changes in the law
Regulations, figures and sums
of money may have changed since
publication. Update check:
0845 600 9 006
www.businesslink.gov.uk/figures
their side of the story before a
decision is reached 81
● allow workers to have a
companion at hearings
● not dismiss an employee for a
first offence, except for gross
misconduct
● make sure no disciplinary
action is taken until the case
has been fully investigated
● ensure workers are given an
explanation for any penalty
● give employees the right to
appeal against any decision and
explain how they can do so.
Next steps
● For more information read: Acas
Code Of Practice On Disciplinary
And Grievance Procedures
(ACAS/CP01); Producing
Disciplinary And Grievance
Procedures (ACAS/GO2);
Discipline and Grievances at
Work (ACAS/H02). Contact 08702
42 90 90; www.acas.org.uk
Monitoring email
and Web use
You must inform employees if
you intend to monitor their Web
and email use — preferably
making it part of their
employment contracts. You
can only inspect the content of
individual emails in a number of
restricted circumstances
There are legal restrictions on
how you can monitor employees’
The No-Nonsense Guide
 You also need business advice
This guide covers regulations. You
should also read a guide to general
business advice — from market
research to writing a business plan
use of the Web and email. But
82 this is a complex area which
is covered by three laws: the
Regulation of Investigatory
Powers Act, the Data Protection
Act and the Human Rights Act.
You must inform employees
if you intend to carry out any
monitoring of their email and
Web use — whether this is of
Internet and email traffic or the
contents of emails. Include this
in their employment contracts or
refer to a separate Internet policy
which mentions it.
Remember that monitoring is
intrusive, so consider carefully
if the benefits are sufficient to
justify its use.
In general you can monitor
email and Internet traffic,
installing software which logs
websites visited and emails
sent and received together
with addresses (but not their
contents).
You can inspect the content
of individual emails without a
worker’s consent for a number
of specific business purposes.
These include:
● recording transactions or
other important business
communications
● making sure employees are
complying with the law and
your internal policies
● preventing abuse of your
telecoms system
● checking emails when staff are
on leave.
If you want to monitor
communications for other
purposes, or are not sure
The No-Nonsense Guide
whether you have the right to
read an email, you must get
permission to do so — from both
the sender and recipient.
Next steps
● The law in this area can be
complex and you should act
carefully or consult a solicitor
● For more information read:
Internet And Email Policies
(ACAS/AL06). Contact 08702 42
90 90; www.acas.org.uk
Quick Guide To The Employment
Practices Code — Ideal For The
Small Business. Contact
08453 091 091; www.ico.gov.uk
Valid reasons for
dismissal
If you are dismissing an employee,
you must make sure you are
acting fairly and reasonably. There
are a number of potentially valid
reasons for dismissal — from
redundancy to the employee being
unable to do the job
Employees with at least a year’s
service with you who are under 65
(or the normal retirement age for
a person doing that job) have the
right not to be unfairly dismissed.
Changes with effect from 1
October 2006 remove the upper
age limit.
They can complain to an
employment tribunal if they think
they have been unfairly dismissed.
If the reason for dismissal is
one of a number which the law
regards as ‘automatically unfair’,
an employee can make a tribunal
claim regardless of their age or
length of service.
For a dismissal to be fair, you
must have a valid reason for
dismissing the employee.
Valid reasons relate to:
● the employee’s ability or
qualifications to do the job
● the employee’s conduct
● the employee’s position being
made redundant
● any legal requirements
preventing the employee from
continuing to do the job (for
example, if a van driver is
banned from driving)
● some other ‘substantial’
reason not covered by the four
reasons above.
You must also act reasonably in
dismissing the employee (such as
giving them a chance to improve
or taking some other form of
disciplinary action, for example).
There are no set rules on
what is reasonable — it will
depend on all the circumstances,
including your business’ size and
administrative resources.
You may be required to prove
you have acted reasonably (to
an employment tribunal) if an
employee makes a claim. You
should be able to show you have
acted fairly and consistently. A
dismissal is automatically unfair
if you fail to follow statutory
minimum disciplinary procedures
before taking action, and tribunal
awards may be increased.
Remember that a dismissal

}
also takes place when an
employee’s limited-term contract
expires but is not renewed.
A tribunal is not pleasant
Next steps
for anyone involved. We
won because the employee ● The Acas helpline can offer
was dismissed for gross advice. Contact 08457 47 47 47
misconduct. We have now ● See The Acas Code Of Practice,
rewritten our contracts to page 81
make them watertight and ● See Dismissals Which Are
we use the services of an Automatically Unfair, below
● See Discrimination Due To Race,
employment law firm
Sex, Age, Religion Or Belief, page 69
~
● See Handling Redundancy, page 87
● For more information on
dismissal read: Dismissal
— Fair And Unfair: A Guide for
Employers (URN 06/645). Contact
www.dti.gov.uk/publications
Dismissals which are
automatically unfair
Some dismissals are regarded
as automatically unfair. You must
Neil Shah follow minimum disciplinary
procedures and must not dismiss
Praesto Training and
an employee for reasons that
Development Ltd include pregnancy and seeking
training and development to assert statutory employment
consultancy rights
Harrow, Middlesex
If you dismiss an employee or
select them for redundancy
when others in similar
circumstances aren’t selected
it will automatically be unfair,
regardless of their age or length
of service, if your reasons include
one or more of the list below.
The list is not exhaustive. The
Resolving problems
with employees
DTI publication, Dismissal — Fair
And Unfair provides more detailed 83
examples (see Next steps below).
● pregnancy
● taking particular kinds of
action on health and safety
grounds
● carrying out or proposing
to carry out functions as an
employee representative
● membership or non-
membership of a trade union;
taking part, or making use of
the activities or services of
an independent trade union;
or discouraging people from
seeking union recognition
● carrying out or proposing to
carry out duties as a trustee of
a company pension scheme
● seeking to assert a wide range
of statutory employment
rights, including rights under
minimum wage, flexible
working or working time
legislation
● disclosing certain kinds of
wrongdoing in the workplace
● taking — or trying to take
— parental leave or adoptive
leave, or time off for
dependants
● taking lawfully organised
industrial action lasting 12
weeks or less (longer if you
don’t take reasonable steps to
resolve the dispute).
A dismissal is also automatically
unfair if you fail to follow
statutory minimum disciplinary
procedures before taking action
— and tribunal awards may be
increased.
The No-Nonsense Guide

Next steps
84
● See Discrimination Due To Race,
Sex, Age, Religion Or Belief, page 69
● See Workers With Disabilities,
page 71
● See When An Employee Is
Pregnant, page 72
● For more information read:
Dismissal — Fair And Unfair:
A Guide for Employers
(URN 06/645). Contact
www.dti.gov.uk/publications
Dismissals which
are automatically
unlawful
Some reasons for dismissal are
automatically against the law
It is unlawful to dismiss a worker
or select them for redundancy
because of their:
● sex (including being married,
civil partnership and gender
reassignment)
● race, nationality or ethnic origin
● disability
● sexual orientation
● religion or belief.
A worker — who can be an
employee or any individual
who works for you who is
not genuinely self-employed
— who believes they have been
dismissed for such a reason
could make a discrimination
claim against you.
The No-Nonsense Guide
}
We found people by word
of mouth initially. New
businesses are in quite
a vulnerable situation
because you don’t know
how it is going to go. Luckily
all our recruits so far have
been a success
~
Christine Armstrong
Second Nature UK Limited
natural-wool
building insulation
Penrith, Cumbria
Advice in Scotland
Business Gateway in Lowlands
(0845 609 6611;
www.bgateway.com);
Highlands & Islands Enterprise
(01463 234171; www.hie.co.uk)
Next steps
● See Discrimination Due To Race,
Sex, Age, Religion Or Belief, page 69
● See Workers With Disabilities,
page 71
● See When An Employee Is
Pregnant, page 72
● See Unpaid Leave For Parents,
page 78
● See Time Off Work Other Than
Annual Leave, page 68
● For more information read:
Dismissal — Fair And Unfair: A
Guide for Employers
(URN 06/645). Contact
www.dti.gov.uk/publications
Giving notice of
dismissal
If you dismiss an employee,
they are entitled to a minimum
amount of notice — unless it is
for gross misconduct
The minimum amount of notice
you must give an employee
you are dismissing depends
on how long they have been
continuously employed. You can
include longer periods of notice
in your employment contracts if
you wish (see Next steps below).
You must give one week’s
notice to staff with at least one
month’s service. Employees with
two years’ service must get at
least two weeks’ notice.
You must then give an extra
week’s notice for each further
year of continuous employment

with you up to a maximum of 12
weeks’ notice for service of 12
years or more.
You are not obliged to give
notice if you are dismissing an
employee for gross misconduct.
You must pay employees at
their normal rate during their
notice period. They have the
right to a minimum rate of pay if
they are on sick leave, holiday or
ordinary maternity leave during
the period of notice.
If you do not provide work for
an employee on a day when you
would normally do so because
the business isn’t working at its
normal level, the employee is
‘laid off’.
But you cannot refuse to
pay them because work isn’t
available unless their contract of
employment states that you have
the right to do so.
Employees may agree to be
laid off without pay in particular
circumstances — such as
where redundancy would be the
only alternative. But this does
not give you the right to lay them off
in future.
Most employees are entitled
to a statutory guarantee payment
for any complete day of lay-off
without pay — but with a limit of
five days’ payment in any three-
month period.
Next steps
● See Discipline And Grievance
Issues, page 80
● See Drawing Up Employment
Contracts, page 59
● For more information read:
Rights To Notice And Reasons
For Dismissal (URN 06/541);
Guarantee Payments —
Guidance (URN 06/536). Contact
www.dti.gov.uk/publications
Discipline & Grievances at Work
(ACAS/H02); Lay-Offs And Short-
Time Working (ACAS/AL01).
Contact 08702 42 90 90;
www.acas.org.uk
Written reasons for
dismissal
There are cases in which you
may be obliged to provide
written reasons for dismissing
an employee
If an employee who has been
continuously employed with you
for at least one year asks for
the reasons for their dismissal
— orally or in writing — you must
provide a written statement of the
reasons within 14 days.
If you dismiss a woman who is
pregnant or on maternity leave
or an employee who is taking
adoption leave, you must give
them a written statement of your
reasons whether they ask for one
or not and regardless of their
length of service.
Next steps
● For more information read:
Rights To Notice And Reasons
For Dismissal (URN 06/541).
Contact www.dti.gov.uk/
publications
Resolving problems
with employees
85
Constructive dismissal
An employee may be entitled to
resign and make an unfair
dismissal claim to an employment
tribunal if you breach a
fundamental term of their
employment contract — cutting
their salary, for example
An employee may be entitled
to resign if you breach a
fundamental term of their
employment contract. This is
known as constructive dismissal.
If the employee considers the
constructive dismissal unfair
and has at least one year’s
service with you, they can make
an unfair dismissal complaint
to an employment tribunal. The
employee must first raise the
matter with you in writing, unless
the case involves harassment or
bullying. Breaches of contract
that may give rise to constructive
dismissal claims might include
anything which makes it
impossible or intolerable for the
employee to continue doing the job.
Examples include:
● cutting — or attempting to
cut — an employee’s wages
or salary or other contractual
benefits
● transferring an employee to a
different job or location in the
absence of any stated or implied
contractual right to do so
● failing to provide a safe place
of work
● subjecting a supervisor or
manager to unwarranted
The No-Nonsense Guide
 It worked for me
How I set out
the rules
and manage
staff conduct
Anita Brightley-Hodges
is founder and managing
director of still waters run
86 deep, a London-based design
consultancy. The company was
established in 1990, employs
ten people and turns over more
than £900,000 a year
}Shortly after I set up the
business, I hired two full-time
members of staff. I wasn’t an
expert in employment law,
so I sought advice from an
HR consultant on producing
an employee handbook. I
wanted a proper framework
for employment procedures
that would protect both the
business and my staff.
I also felt having clear
procedures would reassure
new recruits that we were
a bona fide business and
would conduct ourselves in
a professional manner. Now,
when staff join the business,
they get an induction pack
containing their employment
contract and the handbook
– which is kept up to date
with any changes to
employment law.
Our employee handbook
clearly lays out our discipline
and grievance procedures. It’s
essential to do things by the
book. If anyone has a grievance
and they want to discuss it
they can. Implementing the
right processes also takes the
The No-Nonsense Guide
emotion out of what could be a
difficult situation.
A couple of years ago, we had
an instance of gross misconduct,
when one of our designers felt
she was being harassed by
a male member of staff. But
because a lot of it happened
outside of work, I wasn’t aware it
was going on.
Matters came to a head when
I found the designer in tears, and
she told me what had happened.
We followed our disciplinary
procedure and suspended the
other member of staff. We then
put in writing exactly what the
problem was with his behaviour
and called him to a disciplinary
hearing.
However, when we asked him
to present his case – he resigned.
This saved us a lot of time, effort
and legal wrangling. It would
also have been difficult for him to
return to work and fit back into
our small team, because he was
seen as a bully.
It’s important that staff know
the procedure to follow and
understand they should speak
to their employer if they have
Vicki Couchman/UNP
Anita: Follow a set procedure
and be consistent and fair
an issue they are concerned
about. If the employer knows
what the problem is, they can
nip it in the bud and prevent all
the upset that comes later.
We had another incident of
misconduct where we had to
issue several warnings to a
staff member who kept coming
in late. We issued both verbal
and written warnings, but it
kept happening, so we had to
let him go.
It was very difficult in an
instance such as that one,
which involved somebody who
was otherwise a very good
employee. But it’s important to
follow a set procedure and be
consistent and fair.
~
still waters run deep
London
Tel 0207 247 5253
www.stillwaters-rundeep.com

Advice in Wales
Business Eye (08457 96 97 98;
www.businesseye.org.uk)
criticism or abuse in the
presence of colleagues or
subordinates.
Next steps
● The Acas Helpline can offer
advice and information on
constructive dismissal. Contact
08457 47 47 47;
www.acas.org.uk
Handling redundancy
If there is a change in the way
your business operates or if
you experience a reduction in
business, there may no longer
be a job for an employee to
do, so their position becomes
redundant. Redundancy can be
one of the most intimidating
aspects of running a business,
but following established
guidelines will ensure you follow
the correct path
Redundancy is when you dismiss
an employee because:
● you close your business
● you close the employee’s
workplace
● there is a diminishing need for
the employee to do work of a
particular type.
Normally the job must have
disappeared before you
consider redundancy, for
example through a decline in
business or the introduction
of automated equipment. You
must take reasonable steps to
}
When we first took on staff
we used information from
Acas. We also engaged
an employment advisory
service to make sure
our people policies were
absolutely clear
~
Mark Baker
Glevum Security Ltd
security services
Gloucester
Resolving problems
with employees
avoid compulsory redundancies
by considering alternatives 87
such as short-time working,
early retirement or shedding
temporary or contract labour.
Selection should always
be objective. If you base it on
performance, you will need to
back it up with evidence
— perhaps from an existing
appraisal system.
People whose jobs are made
redundant have the right to
be offered suitable alternative
employment wherever possible.
And most employees who are
made redundant have the right
not to be unfairly dismissed.
Employees with less than one
year’s service don’t have the right
to complain to an employment
tribunal, unless the reason
for dismissal is automatically
unfair (see the sections above,
Valid Reasons For Dismissal
and Dismissals Which Are
Automatically Unfair).
Employees who are made
redundant have the right to
reasonable time off on full pay
for job-hunting or to arrange
training. There are minimum
levels of redundancy pay that
employees may be entitled to
(see Qualifying For Redundancy
Pay, below).
If you are making more than 20
employees redundant within a 90-
day period, you must consult with
employees’ representatives (or a
trade union that the employees
belong to which is recognised to
negotiate on their behalf). You
must also notify the Department
of Trade and Industry by letter or
The No-Nonsense Guide
 Advice in Northern Ireland
Invest Northern Ireland
(028 9023 9090; www.investni.com)
using form HR1 (see Next steps
88 below).
When the consultation begins,
you must give employees, their
representatives or the union
written details of:
● the reason for the
redundancies
● numbers and types of the
employees involved
● the total number of employees
of each of these types you
employ at the establishment
● how you plan to select the
employees to make redundant
● how you will carry out the
redundancies
● how you will calculate
redundancy payments.
Consultation with employees or
unions does not have to end in
agreement, but it must be properly
carried out. And while consultation
is not a statutory requirement if
fewer than 20 employees are to be
made redundant, it is advisable as
best practice.
Acas provides comprehensive
guidance on handling redundancy
that is strongly recommended
(see Next steps below).
Next steps
● See Valid Reasons For
Dismissal, page 82
● See Dismissals Which Are
Automatically Unfair, page 83
● For more information read:
Redundancy Handling (ACAS/
B08). Contact 08702 42 90 90;
www.acas.org.uk
Redundancy Entitlement
Statutory Rights — A Guide
The No-Nonsense Guide
}
Every new employee has a
rigorous one-day induction
where we go through the
company manual. It covers
things like conduct and
customer care. It seems to
work well as we rarely have
problems
~
Sarah Turner
Express Maintenance
(Yorkshire) Ltd
property maintenance
company
Hull
For Employers (URN 06/540).
Contact www.dti.gov.uk/
publications
● For more on consultation read:
Redundancy Consultation And
Notification — Guidance (URN
06/539). Contact www.dti.gov.uk/
publications
● Form HR1 is available from your
local Redundancy Payments
Office or Jobcentre Plus. To
order the form, contact
020 7291 6895; www.insolvency.
gov.uk/forms/forms.htm
Qualifying for
redundancy pay
You are required to pay certain
minimum amounts to employees
who qualify for redundancy pay
when they lose their jobs
Employees are entitled to
statutory redundancy pay if they
are made redundant and have
at least two years’ continuous
service since their eighteenth
birthday and are under 65 or
the normal retiring age for the
job. Changes with effect from 1
October 2006 remove the upper
and lower age limits.
Payments are based on
the length of the employee’s
continuous service and their
weekly pay — though you can pay
more if you wish:
● service is counted up to a
maximum of 20 years
● service between the ages of
18 and 21 counts for half a

week’s pay
● every year’s continuous service
between the ages of 22 and 40
is worth one week’s pay
● every year’s continuous
service from the age of 41
onwards entitles the redundant
employee to 1.5 weeks’ pay.
A week’s pay is based on actual
income or average weekly earnings,
but is capped in 2006 at £290.
Statutory redundancy pay is
free of tax and National Insurance
contributions; any additional
severance pay can usually be paid
tax-free up to a current total of
£30,000, though this may depend
on the terms of the employment
contract.
Next steps
● For more information read:
Redundancy Entitlement —
Statutory Rights: A Guide for
Employees (URN 06/540). Contact
www.dti.gov.uk/publications
● The Acas Helpline can offer
advice and information on
redundancy issues. Contact
08457 47 47 47;
www.acas.org.uk
Sale or transfer
of a business
Employees’ rights are protected
when the business they work for is
sold or given to another member
of the owner’s family to run.
Regulations protect employees’
terms and conditions of
employment when the business
they work for is transferred to
a new owner (often known as
the transfer of an undertaking).
This can be when all or part of
a business is sold as a going
concern or given to another
member of your family to run.
Employees' terms and
conditions cannot lawfully be
changed if the transfer is the
reason for such changes.
An employee’s period of
continuous employment is not
broken by the transfer.
If you are the new owner of a
transferred business, you cannot
pick and choose which employees
to take on. You take over the
contracts of all employees who
were employed in the business
immediately before the transfer
— and those who would have
been employed if they had not
been unfairly dismissed for
a reason connected with the
transfer.
If you are transferring your
business to someone else, you
must let employees who will be
affected know and consult their
representatives. These can be
officials of a recognised trade
union or representatives elected
by the employees.
Neither the old employer nor
the new one can fairly dismiss an
employee because of the transfer
unless there is an economic,
technical or organisational
reason that involves making
changes to the workforce. You
will need to be able to show that
Resolving problems
with employees
you acted reasonably in using one
of these justifications. 89
Employees' terms and
conditions transfer with them
to the new employer. There are
limitations to the variations to
terms and conditions on which
employees and the new employer
are allowed to agree.
The only contractual rights
which are not transferred
relate to occupational pensions.
However, where pension rights
have been established you have
to match employee contributions,
up to six per cent of salary, into
a stakeholder pension – or offer
an equivalent alternative. You
also take over any collective
agreements made on behalf of
employees.
Next steps
● For more information read:
Employment Rights On The
Transfer Of An Undertaking
— A Guide To The 2006 TUPE
Regulations For Employees,
Employers And
Representatives (URN 06/542).
Contact www.dti.gov.uk/
publications
The No-Nonsense Guide
 There’s a wide range of government help for new and developing businesses — ranging from
professional advice and training to grants and other forms of financial help. The precise type
of assistance can depend on where you’re based
Government advice and
support for your business
90
Make Business Link
your first port of call
Business Link provides the
information, advice and support
needed to help anyone who is
thinking of starting a business,
to help small and medium-sized
business to grow, and to help
businesses deal with problems,
challenges and opportunities.
Rather than providing all the
advice and help itself it will
fast-track customers to the help
they need
The Business Link service is
coordinated nationally, while
local delivery is driven by the nine
Regional Development Agencies
in England. Business Link is
led by business people. This
means we have the expertise to
understand the diverse needs of
businesses and are well placed
to provide access to insightful,
affordable and relevant advice.
Next steps
● If you’re planning to set up in
business, contact Business
Link in England by calling the
helpline on 0845 600 9 006 or
visit the website at
www.businesslink.gov.uk
The No-Nonsense Guide
If your business is in
Scotland, Wales or
Northern Ireland
To find out about the support
and advice available if your
business is in Scotland, Wales
or Northern Ireland, you should
contact these organisations
providing services equivalent to
those of Business Link
● Lowland Scotland
Business Gateway:
0845 609 6611;
www.bgateway.com
● Highlands and Islands
Highlands & Islands Enterprise:
01463 234171; www.hie.co.uk
● Wales
Business Eye:
08457 96 97 98;
www.businesseye.org.uk
● Northern Ireland
Invest Northern Ireland:
028 9023 9090;
www.investni.com
Grants and other types
of government support
A number of government
departments, including the
Department of Trade and Industry
(DTI), provide support schemes
for businesses — the highlights
are featured on these pages
New schemes and improvements
are continually being introduced
to give a better service to people
setting up and developing a
business. It’s always worth
checking with Business Link to
ensure you’re making the most of
what’s on offer and whether any
schemes you’ve used in the past
have been changed.
To save you time, the DTI
brings together — in a one-
stop shop on the Internet
— information on all the support
available from government
departments. You can find more
information about support
available from the DTI and other
government departments by
using the business-support
directory at
www.businesslink.gov.uk/support
Next steps
● Check government support at
www.businesslink.gov.uk or call
the Business Link helpline on
0845 600 9 006
 Government advice and
support for your business

Check for changes in the law

Regulations, figures and sums

of money may have changed since
publication. Update check:
0845 600 9 006
www.businesslink.gov.uk/figures

A government grant
could help you start

You may be able to get a

government grant to help start
}
I used to pass Business Link
on my way to work and one
day I popped in to discuss
How the Government
can help you get a loan

Have you tried and failed to get

a conventional loan because of a
91

your business
Success in obtaining a grant
depends on a combination of
factors, including:
a business idea. We had
no idea how to get off the
ground but they helped at
every step
lack of security? If so, you might
be able to get help from the
Government
In certain circumstances

● Location: your business
may have to be located in a
specified part of your district
or region.
● Size: almost all grants have a
limit on the number of people
employed in a business that
might qualify for assistance.
● Industry or business sector:
many grants target specific
sectors that need special
assistance. Not every type of
business will be eligible for
every grant available in your
business sector.
Your Business Link is best placed
to advise you on the options
available for your business.
Next steps
● Check with Business Link to see
if you qualify for a grant. Contact
0845 600 9 006;
www.businesslink.gov.uk
~
the government will act as a
guarantor of loans to small
businesses with viable business
proposals. A Small Firms Loan
Guarantee (SFLG) allows a
business to get a loan from an
ordinary bank or other financial
institution which would otherwise
turn down the proposal because
the business can’t offer sufficient
security against the money lent.
The SFLG is available for loans
of up to £250,000 taken out by
businesses that have a turnover
not greater than £5.6m, and that
Hilary Kinnair have been trading for less than
i2B five years.
IT specialist The Government guarantees
Sunderland 75 per cent of the loan. In return
for the guarantee the borrower
pays the Government a premium
of 2 per cent a year on the
outstanding amount of the loan.
The commercial aspects of
the loan are matters between
borrower and lender.
You have to apply directly to
one of the participating lenders.
Your local Business Link can
advise you where to go to access
the SFLG.

The No-Nonsense Guide


Next steps
92
● For more information on the
Small Firms Loan Guarantee
contact 0845 001 0032;
www.businesslink.gov.uk/sflg
Government tax
relief and credits to
help research and
development
The Government offers
research-and-development
tax relief and credits to small
and medium-sized companies
to encourage investment in
research and development
When you’re working out
your company’s profits for tax
purposes you can increase
the amount you deduct for
appropriate research and
development spending — from
the normal 100 per cent
allowance to 150 per cent. This
is called R&D (research and
development) tax relief.
If your company is not in
profit it can exchange its
qualifying research and
development losses (including
the R&D tax relief) for a cash
payment from the Government.
This can be worth up to 24 per
cent of your company’s
spending on research and
development. It’s called the
payable R&D tax credit and the
payment is made to you by HM
Revenue & Customs.
The No-Nonsense Guide
}
Business Link has helped
us right from the start
— from guidance on our
initial business plan through
to help with training and
applying for a Grant for
Research and Development
~
Tony Douglas
Contained Solutions Ltd
plastic containers
Brighouse, W. Yorkshire
You also need business advice
This guide covers regulations. You
should also read a guide to general
business advice — from market
research to writing a business plan
A company can claim R&D
tax relief and the payable R&D
tax credit even though it has not
started to trade for tax purposes.
Check with your accountant if
you think you might benefit from
this option.
Next steps
● Find out more about R&D tax
relief and credits from your HM
Revenue & Customs office or at
www.hmrc.gov.uk/randd
Equity finance from
venture capital funds
and business angels
Although the Government
doesn’t make equity investments
directly in individual businesses
— putting in money in return for
a stakeholding — it does support
a range of methods that help
new and growing businesses to
get easier access to finance
Venture Capital Funds allow
you to raise finance in return for
a share in your business. The
Government has launched a
series of Regional Venture Capital
Funds in England to provide risk-
capital finance — for amounts
up to £500,000 — to small and
medium-sized business which
show growth potential. There are
also government-supported Early
Growth Funds which provide risk-
capital finance up to £100,000.
Both the regional and early-

growth funds are managed by
venture-capital professionals
and are commercially focused,
making commercial returns.
The Government also supports
the British Business Angels
Association, which matches
businesses seeking finance with
suitable networks of business
angels.
These are usually wealthy
individuals who invest in new and
growing businesses in return for
a share of the equity.
The Bridges Community
Development Venture Fund
provides venture-capital funding
to firms which are in the 25 per
cent most disadvantaged areas
of England and which can show
meaningful interaction with
their local economy. This could
be through employing local
people, providing services to local
communities or by stimulating
other local businesses through
their purchasing decisions.
The fund is operated by the
private-sector fund-management
team Bridges Community
Ventures (see Next steps below).
Next steps
● Contact Business Link to find
out about Venture Capital Funds:
0845 600 9 006;
www.businesslink.gov.uk
● Contact Bridges Community
Ventures: 020 7262 5566;
www.bridgesventures.com
● For venture-capital
opportunities in Scotland, Wales
or Northern Ireland contact
business support services listed
under If Your Business Is In
Scotland, Wales Or Northern
Ireland, page 90
● For more information on
the British Business Angels
Association contact 020 7089
2305; www.bbaa.org.uk
Training for you and
your workforce
You should check the range of
government training help for
people setting up and running
businesses or moving into
self-employment. Contact
details are in Next steps at the
end of this section
Business Link can open the door
to a variety of training events and
skill-development packages for
both you and your workforce.
You can get help with training
designed to give you the skills
and knowledge to set up and
run your own business — from
business planning and sales to
marketing and business finance.
In addition to training
events, Business Link provides
networking opportunities so
you can meet like-minded
individuals to build and develop
business relationships and share
knowledge.
The Learning and Skills
Council (LSC) is the government
body responsible for all post-
16 education and training in
England. The LSC may be able
to subsidise the cost of training
Government advice and
support for your business
for you or your employees (for
example through the recruitment 93
and training of a Modern
Apprentice) and help with basic
skills training or in identifying
skills issues in your business.
Career Development Loans
help people from a wide range of
backgrounds pay for vocational
learning or education courses.
You can get a loan of between
£300 and £8,000 to cover up to
80 per cent of course fees. The
Government pays the interest on
your loan during the course. You
then repay the loan to the lender
— Barclays, The Co-Operative
Bank and Royal Bank of Scotland
— over an agreed period at a
fixed rate of interest.
New Deal gives jobseekers
aged 18-24, 25+ and 50+ and
jobseekers with disabilities a
chance to develop their potential,
gain skills and experience and
find work.
New Deal is part of the
Government’s Welfare to Work
strategy — it offers businesses
the chance to make use of the
untapped energies and talents of
a new labour force. Participating
businesses benefit from wage
subsidies and subsidised
training for employees.
If you’re thinking of setting up
in business and are on New Deal
as an individual, you may also be
able to benefit directly through
the New Deal Self-Employment
Option.
Learndirect for Business
can help you gain skills to deal
with the day-to-day issues that
confront your business.
The No-Nonsense Guide
94
A boost for
business in
Enterprise
Areas
When you run your own
business you can’t always take
time out for training, so flexible
learning packages have been
designed which you can use as
and when you want them.
Because each course
organised by Learndirect for
Business looks at a specific
business issue, you can tailor
your learning to your immediate
needs. And because the
courses are online, you and your
employees can get the skills to
succeed at a time and a place to
suit the daily demands of your
business.
The No-Nonsense Guide
To help remove barriers to
enterprise in disadvantaged
communities, the government
has designated 2,000 Enterprise
Areas covering the most
deprived areas of the United
Kingdom. Measures have been
introduced to boost business and
investment in these areas
To check whether your intended
or existing business is in an
Enterprise Area, visit
www.hmrc.gov.uk/so/
pcode_search.htm
and use the postcode search tool.
If you have any problems with
the search, call the Stamp Taxes
Enquiry Line on 0845 603 0135.
Your local Business Link is the
best place for more information
about whether your business is
eligible for one of the schemes
outlined below, especially as
some help is not exclusive to
Next steps
● For more information on training
and skills development, contact
Business Link: 0845 600 9 006;
www.businesslink.gov.uk
● Contact the Learning and Skills
Council: 0870 900 6800;
www.lsc.gov.uk
● For more information on Career
Development Loans contact
0800 585 505;
www.lifelonglearning.co.uk/cdl
● For more information on
employing someone through the
New Deal Programme, contact
Employer Direct:
businesses in Enterprise Areas.
If you are in an Enterprise
Area, you may benefit from some
form of government assistance:
● Stamp duty exemptions
for all residential-property
transactions up to £150,000.
Further information from
the HM Revenue & Customs
Stamp Taxes Enquiry Line 0845
603 0135; www.hmrc.gov.uk/so
or any HM Revenue & Customs
Stamp Office.
● Selective Finance for
Investment in England (SFI)
provides small and medium-
sized businesses looking at
the possibility of investing
in an Enterprise Area with a
grant or occasionally a loan.
The minimum threshold for
grants is £10,000. Visit
www.dti.gov.uk/
regional/index.html
for more information.
0845 601 2001;
www.jobcentreplus.gov.uk
● For information about the New
Deal Self-Employment Option
contact Jobseeker Direct:
0845 6060 234;
www.newdeal.gov.uk
● For more information on
Learndirect for Business,
contact 08000 150 750;
www.learndirect-business.co.uk

Advice in Scotland
Business Gateway in Lowlands
(0845 609 6611;
www.bgateway.com);
Highlands & Islands Enterprise
(01463 234171; www.hie.co.uk)
● Help from a Community
Development Finance
Institution (CDFI). CDFIs
provide mainly loan finance
to small and medium-sized
enterprises in disadvantaged
communities where such
enterprises cannot access
mainstream finance to meet
their needs. The Government
is encouraging private
investors to invest in CDFIs
through the Community
Investment Tax Relief. To
find out whether there’s a
CDFI in your area, contact
the Community Development
Finance Association at
020 7430 0222; www.cdfa.org.uk
● A targeted package of
support for employers from
HM Revenue & Customs,
including assistance on tax and
National Insurance provided
by HM Revenue & Customs
Help with exporting
There’s a range of help if you
intend to export products or
services
The Government’s export agency,
UK Trade & Investment, offers
training, information and advisory
services to help you get the best
possible start to exporting.
Next steps
● For more information about
exporting contact UK Trade
Government advice and
support for your business
business-support teams. existing business is in an 95
Contact 0845 60 70 143; Enterprise Area. Use the
www.hmrc.gov.uk/bst postcode search tool on the
● Neighbourhood Renewal HM Revenue & Customs
Projects: these may include stamp taxes website at
business advice, training www.hmrc.gov.uk/so/
help, accessing finance and pcode_search.htm or phone
premises and help with 0845 603 0135
tackling crime. Further details
are available from Business
Link (0845 600 9 006;
www.businesslink.gov.uk), your
local authority or government
office, and from
www.neighbourhood.gov.uk
Next steps
● Check your eligibility for the
schemes above with Business
Link. Contact 0845 600 9 006;
www.businesslink.gov.uk
● Before seeking help specifically
for Enterprise Area businesses,
check whether your new or
& Investment: 020 7215 8000; Next steps
www.uktradeinvest.gov.uk
● To find out your local authority’s
contact details, go to
www.direct.gov.uk and
Help from your council click on Find Your Council
Local authorities also provide
support for people setting up in
business
Help from your local council
includes grants, assistance with
premises and advice on local
planning and environmental
health regulations.
The No-Nonsense Guide
 Useful contacts
96 Start at Business Link
Your first port of call for help
in setting up your business is
Business Link — the
government organisation which
provides information to new and
existing small businesses
across the complete range of
business issues.
You can speak to an adviser by
calling 0845 600 9 006 or you can
visit www.businesslink.gov.uk
for comprehensive, practical
information on how to start and
run your business. You should
also check the site for details of
any changes to the regulations in
this guide.
For the equivalent services in
Scotland, Wales and Northern
Ireland, please see the next
sub-section below.
Government advice and
financial support
Business Link: government
support for businesses in
England. Contact 0845 600 9 006;
www.businesslink.gov.uk
Business Gateway (Scotland):
help and advice for businesses in
Lowland Scotland.
Contact 0845 609 6611;
www.bgateway.com
The No-Nonsense Guide
Highlands & Islands Enterprise:
information for businesses
located in the Scottish Highlands
and Islands. Contact
01463 234171; www.hie.co.uk
Business Eye: government
support for businesses in Wales.
Contact 08457 96 97 98;
www.businesseye.org.uk
Invest Northern Ireland:
government support for
businesses in Northern Ireland.
Contact 028 9023 9090;
www.investni.com
Small Firms Loan Guarantee:
government scheme
guaranteeing loans for firms
which can’t get bank finance
because of a lack of security.
Contact 0845 001 0032;
www.businesslink.gov.uk/sflg
Regional Development Agencies
(RDAs): regional funding and
development schemes. Contact
www.dti.gov.uk/regional/
regional-dev-agencies/index.html
UK Trade & Investment: guidance
for companies that intend to or
are already exporting. Contact
020 7215 8000;
www.uktradeinvest.gov.uk
Jobcentre Plus Access to Work:
financial support for people with
disabilities when setting up a
business. Contact
www.jobcentreplus.gov.uk or
phone your nearest office
Forming a business
Companies House: to form a
limited company or limited
liability partnership. Contact
0870 33 33 636;
www.companieshouse.gov.uk
National Business Register:
to check availability of business
names. Contact www.start.biz
Paying tax as a self-
employed person
Helpline for the Newly Self-
Employed: to register as self-
employed if you’re going into
business as a sole trader or
partnership. Contact
08459 15 45 15;
www.hmrc.gov.uk/leaflets
Self Assessment Orderline:
forms, leaflets and factsheets on
self-assessment. Contact
0845 9000 444
Paying employees’ tax
and National Insurance
New Employer’s Helpline: to
register and receive a New
Employer’s Starter Pack. Contact
0845 60 70 143;
www.hmrc.gov.uk/employers
 Useful contacts

Now you’ve reached the end of this guide, you should be well on
the way to understanding the main rules and regulations that
will affect you when you’re setting up in business. And if you need
any further information or advice, don’t worry — help is at hand

You can get free help and advice from the organisations listed
on these pages — and copies of any forms you might have to fill
in. In-depth details of free publications can be found in the
Next steps sections throughout the guide

Employer’s Helpline: Advice on Scotland. Contact 01786 457700;

paying employees’ tax and National
Insurance. Contact 08457 143 143;
www.hmrc.gov.uk/employers
Employer’s Orderline: forms and
guides on paying employees’ tax
and National Insurance. Contact
0845 7 646 646;
www.hmrc.gov.uk/employers
VAT
HM Revenue & Customs: to
register for VAT and for advice
and forms. Contact 0845 010 9000;
www.hmrc.gov.uk
Business premises
Planning Portal website:
information on planning
permission. Contact
www.planningportal.gov.uk
Royal Institution of Chartered
Surveyors (RICS): advice on
land, property, construction and
associated environmental issues.
Contact 0870 333 1600;
contactrics@rics.org;
www.rics.org.uk
Valuation Office Agency (VOA):
information on business rates.
Contact 020 7506 1700;
www.voa.gov.uk
Health and safety
Health and Safety Executive:
information on health and safety
rules. Contact HSE Infoline
0845 345 0055; www.hse.gov.uk
HSE Books: Publications on
health-and-safety matters.
Contact 01787 881165;
www.hsebooks.co.uk
Protecting the
environment
NetRegs: information on
complying with rules on
environmental protection. Contact
www.netregs.gov.uk
Environment Agency: guidance
on protecting the environment
in England and Wales. Contact
08708 506 506;
www.environment-agency.gov.uk
Department for Environment,
Food and Rural Affairs (Defra):
Contact 08459 33 55 77 for
general enquiries or 08459
556000 for Defra publications;
www.defra.gov.uk/environment
Department for Transport (Road
Safety Unit): information on
carriage of dangerous goods,
road haulage and vehicle imports.
Contact www.dft.gov.uk
Scottish Environment Protection
Agency (SEPA): guidance on
protecting the environment in
www.sepa.org.uk 97
Patents, trade marks,
copyright and
design right
Patent Office: for help in
protecting your own ideas and
checking you’re not infringing
anyone else’s intellectual
property rights. Contact 0845 9
500 505; www.patent.gov.uk
Intellectual Property website:
information on intellectual
property. Contact
www.intellectual-property.gov.uk
European Patent Office: to apply
for patents in up to 30 European
countries. Contact
www.european-patent-office.org
Trading standards
and payment
Trading Standards Institute:
contact 0870 872 9008;
www.tradingstandards.gov.uk
Office of Fair Trading: to apply
for a consumer credit licence.
Contact 08457 22 44 99;
enquiries@oft.gsi.gov.uk;
www.oft.gov.uk
Better Payment Practice Group:
advice on getting paid on time.
Contact www.payontime.co.uk

The No-Nonsense Guide


98 IT and e-commerce
Federation Against Software
Theft (FAST): information on
software piracy and licensing.
Contact 01628 622121;
www.fast.org.uk
Business Software Alliance:
advice on software piracy and
licensing. Contact 020 7245 0304;
www.bsa.org/uk
Data protection
Information Commissioner:
guidance on data protection.
Contact 01625 545 745;
www.ico.gov.uk
Employment rules
DTI Publications: extensive
information on employment
rules and regulations — from
employment contracts and
maternity rights to national
minimum wage and redundancy.
Contact www.dti.gov.uk/
publications;
publications@dti.gsi.gov.uk;
0845 015 0010
Acas: best-practice guides on
employment issues. Contact
08457 47 47 47 for general
enquiries or 08702 42 90 90 for
publications; www.acas.org.uk
The No-Nonsense Guide
Home Office: how to check
someone is entitled to work in
the UK. Contact 0845 010 6677;
www.homeoffice.gov.uk
Jobcentre Plus: can help you find
the right person for your business.
More than 2.5m vacancies are
placed with the Employer Direct
service each year.
Contact 0845 601 2001;
www.jobcentreplus.gov.uk/
employers
Employment Tribunal Service:
details of what to do if you’re
taken to an employment tribunal.
Contact 0845 795 9775;
www.employmenttribunals.gov.uk
Equal opportunities
and discrimination
Equality Direct: guidance on
equal opportunities legislation
and best practice. Contact
0845 600 3444;
www.equalitydirect.gov.uk
Disability Rights Commission:
advice and information on
disabled people’s rights and
reviewing your premises with
disabled access in mind. Contact
08457 622 633; www.drc-gb.org
Commission for Racial Equality:
information and advice on
avoiding race discrimination as
an employer. Contact
020 7939 0000; www.cre.gov.uk
Age Positive: Tackling age
discrimination at work. Contact
0114 267 7228;
agepositive@dwp.gsi.gov.uk;
www.agepositive.gov.uk
Equal Opportunities Commission:
help and free publications on
avoiding sex discrimination in the
workplace. Contact
0845 601 5901; www.eoc.org.uk
Training
learndirect: provides a range of
courses and business training.
Contact 0800 100 900;
www.learndirect-advice.co.uk
Career Development Loans:
Deferred payment loans from £300
to £8,000. Contact 0800 585 505;
www.lifelonglearning.co.uk/cdl
Pension advice
The Pensions Regulator:
information on work-based
pensions. Contact 0870 606 3636;
www.thepensionsregulator.gov.uk
The Pension Service: advice on
setting up an employee pension
scheme. Contact
www.thepensionservice.gov.uk/
employer
 Useful contacts

Association of Chartered Certified Trade associations: search for a

Development finance
British Business Angels
Association: contact 020 7089
2305; www.bbaa.org.uk
British Venture Capital
Association: contact
020 7025 2950; www.bvca.co.uk
Accountants: to find a chartered
accountant. Contact
0141 582 2000;
www.accaglobal.com
The Chartered Institute of
Management Accountants.
Contact 020 8849 2251;
www.cimaglobal.com
99
trade association in your sector.
Contact www.taforum.org
Federation of Small Businesses:
contact 01253 336000;
www.fsb.org.uk
British Chambers of Commerce:
contact www.chamberonline.co.uk

Bridges Community Development Institute of Directors:

Venture Fund: contact
020 7262 5566;
www.bridgesventures.com
Community Development Finance
Association: contact
020 7430 0222; www.cdfa.org.uk
Finance and
accounting advice
Factors & Discounters
Association: information on the
factoring industry and
details of member firms that
offer factoring services.
Contact 020 8332 9955;
www.thefda.org.uk
Finance & Leasing Association:
find out more about business
asset finance. Contact
020 7836 6511; www.fla.org.uk
Institute of Chartered
Accountants in England and
Wales: to find a chartered
accountant. Contact
020 7920 8100; www.icaew.co.uk
contact 020 7766 8866;
Legal help www.iod.com
Law Society: Lawyers For Your National Federation of Enterprise
Business: gives small firms a Agencies: contact 01234 831623;
free half-hour legal consultation. enquiries@nfea.com;
Contact 020 7405 9075; www.nfea.com
www.lfyb.lawsociety.org.uk
Investors in People, Your People
Manager: contact 020 7467 1900;
www.yourpeoplemanager.com
Insurance
Disabled Entrepreneurs Network:
British Insurance Brokers’
Contact
Association: contact
www.disabled-entrepreneurs.net
0870 950 1790; www.biba.org.uk
Other organisations
The Prince’s Trust: advice
and financial support for
disadvantaged young people
looking to start a business.
Contact 0800 842 842;
www.princes-trust.org.uk
Shell LiveWIRE: information,
advice and support for
entrepreneurs aged under 30.
Contact 0845 757 3252;
www.shell-livewire.org

The No-Nonsense Guide

Thinking of starting up on your
own but need help with rules,
regulations and forms?
If you’re thinking of running a business or working for yourself,
The No-Nonsense Guide to Government Rules and Regulations saves
you time, stress and money. It tells you what you need to know about the
legal and official side of starting up on your own:

● How to form your business

● Sorting out tax and VAT
● Premises and health and safety
● Protecting your ideas
● Operating in a specialised sector
● Trading and data-protection regulations
● Employing people
● Government financial help
● Doing the paperwork

Other No-Nonsense Guides available from Business Link include:

The No-Nonsense Guide to Small Business Funding
The No-Nonsense Guide to Finance for High Growth Companies

Business Link
This guide is brought to you by Business Link on behalf of the Department of Trade and Industry,
Department for Work and Pensions, HM Revenue & Customs and Her Majesty’s Treasury

The information it contains has been sourced with the full co-operation and agreement
of a range of Government departments and agencies

This publication is available in alternative formats

Contact Business Link for access to a wealth of information and support

services to help your business achieve its potential

Tel: 0845 600 9 006

www.businesslink.gov.uk

For business support and advice:

● In Lowland Scotland contact Business Gateway (Scotland) 0845 609 6611
www.bgateway.com
● In Scottish Highlands & Islands contact Highlands and Istands Enterprise 01463 234171
www.hie.co.uk
The No-Nonsense Guide 2006

● In Wales contact Business Eye 0845 796 9798 www.businesseye.org.uk

● In Northern Ireland contact Invest Northern Ireland 028 9023 9090 www.investni.com

This guide sets out the main regulations that apply when you start up in business, and how to comply with them. It is not comprehensive
or a substitute for independent, legal or other expert advice. Every reasonable effort has been made to ensure that the information in this
booklet is accurate, but no responsibility can be accepted for any errors or omissions.

This guidance is issued to provide users with general background, and is not intended to be, nor should it be considered as amounting to,
legal advice which is capable of being relied upon. Users should seek their own independent legal advice where required.

Printed in the UK on recycled paper with a minimum HMSO score of 75. May 2006.
Department of Trade and Industry. www.dti.gov.uk © Crown Copyright. DTI/PUB 7763/150k/06/05/AR. URN 06/895.