Distance Selling Regs change
Best of Bath Expo
Salary Sacrifice Benefits
Incorrect VAT filing fines
Employee Benefit Records
HMRC Employer Bulletin
HMRC Online Learning
Changes to Distance Selling Regulations
New distance selling rules, applying to business-to-consumer transactions took effect on 13th June 2014, meaning that a number of traders including those dealing with goods, services and digital content need to update their terms of business if they have not already done so. The key changes are as follows:
Traders will now be required to provide a range of information to customers before, during and after transactions. Key among the lengthy list of details with which customers must now be furnished are the following:
The main characteristics of the goods, content and/or services purchased;
A full breakdown of pricing, itemising tax, delivery and other charges;
The trader’s identity including contact details;
The customer’s rights to cancel and withdraw from the contract (including the cooling-off period); and
The duration of the contract.
A full list of information that must be provided is available in Schedule 2 of the Regulations which can be accessed here.
Not only must this information be supplied to customers before they are contractually bound, but it must then be confirmed in what the Regulations refer to as a “durable medium”. Depending upon the nature of the transaction, “durable medium” may refer to a paper hardcopy, an email or storage in a customer’s online account. Whatever the form, however, the information must remain accessible and readable by the customer. A link to a trader’s standard terms and conditions, then, will not suffice as URLs or indeed the content of such terms may be changed at any time, thus cutting the customer off from the information.
2. Delivery of Goods
Whereas the pre-13th June 2014 Regulations imply only that goods will be delivered within a reasonable time, the implied obligation will be strengthened. Goods will now need to be delivered “without undue delay” and in any event, within 30 days of the contract date unless there is an agreement with the customer to the contrary – it may, after all, not be possible to deliver within 30 days for any number of perfectly acceptable reasons. Risk in the goods is to remain with the seller until they are in the physical possession with the customer (subject to limited exceptions).
3. A Longer Cooling-Off Period
Presently set at 7 working days, the statutory cooling-off period for goods and services (and now too the new “digital content” category) will extend to 14 calendar days as follows:
For the sale of goods, the 14 days begin on the date that the customer takes possession of the goods. Refunds must be given within 14 days of the customer returning the goods (or providing proof of postage) and must include the original delivery cost (though only the standard cost – express delivery, gift-wrapping etc. do not need to be refunded) and, unless the seller expressly states otherwise in their terms, the costs of returning the goods;
For the sale of services, the 14 days begin on the date that the contract between the seller and the customer is formed; and
For the sale of digital content, the 14 days begin on the date that the contract between the seller and the customer is formed.
The cooling-off period for the sale of goods is relatively straightforward as goods will reach the customer whole and can be easily returned (unlike services or digital content). Exemptions do, however, apply for certain types of goods – for example those that are in sealed packaging for hygiene reasons, which cannot be returned if the packaging is opened. Also exempt are personalised goods and those which are likely to deteriorate rapidly. In addition, if goods are reduced in value as a result of any handling that exceeds that which would reasonably be allowed in a shop, refunds can be reduced accordingly.
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In the case of services, it may well be the case that the services are capable of being performed within 14 days of the customer’s order (and are required to be by the customer for that matter). In such cases, the customer must give their express acknowledgement that by agreeing to the provision of the services within the cooling-off period, the right to cancel will be lost. If services cannot be fully performed within 14 days but are still to begin within that period, traders cannot prevent customers from exercising the right to cancel. Again, the customer must expressly consent to the commencement of service provision within the cooling-off period, but this time the best a trader can do is be paid for the services as provided up until the customer chooses to cancel (within the 14 days, that is – outside of the cooling-off period cancellation and refunds are for the trader to determine), calculated as a reasonable proportion of the full service / charging period.
In the case of the new digital content category (e.g. music downloads, apps, stock photography), the Regulations are worded to the effect that content cannot be provided before the cooling-off period has ended, unless the trader complies with certain rules. Customers must be required to expressly agree to the provision of the content within the cooling-off period and must further acknowledge that by doing so, they will lose their right to cancel.
4. Model Cancellation Form
The Regulations include a new model cancellation form which must be provided to customers (whether online or on paper). Traders may continue to offer their own cancellation forms alongside the model form.
5. E-Commerce - Making It Clear That Ordering Incurs An Obligation To Pay
In seeming recognition of the fact that customers may not understand that ordering goods or services will incur an obligation to pay for them, the Regulations require that traders obtain customers’ explicit acknowledgement before a binding contract comes into being. Current guidance makes suggestions along the lines of buttons labelled “order now with an obligation to pay” or perhaps the simpler – and more design-friendly – “pay now”. Whether the labelling should be on a button or simply in close proximity to it is unclear but provided that customers are left in no doubt that proceeding with an order (at the relevant point in the process) incurs an obligation to pay, we would suggest that the law will be satisfied.
6. E-Commerce - No More Pre-Checked Boxes That Incur Costs
In situations where additional features, services or products can be added on to an order it can often be the case that check boxes are presented to customers during the order process. Traders must ensure that no such boxes are pre-checked. As desirable as it may be to sell an extended warranty or premium 24-hour helpline support package, customers must be left to expressly choose them. Pre-checked boxes for no-cost options and additions, however, are permissible.
7. Customer Service Telephone Helplines
Traders will no longer be permitted to charge anything more than the basic rate for customer service helplines. Premium rate numbers, therefore, including 0845 and 0870 must now give way to standard geographic numbers or those beginning 01, 02 or 03. Premium numbers can still be provided, however the number must be given no greater prominence than the basic rate equivalent.
Note that this restriction will not apply to technical support helplines provided such helplines are entirely separate from those relating to customer service.
Do you employ teenagers?
Part-time jobs are a great way for young people to get work experience and earn some pocket money. But did you know that if they are aged between 13 and 16, you are legally required to inform your local council who will, subject to legal requirements, issue a permit. Without one, young people are not covered by your employer insurance.
Find out more at http://www.bathnes.gov.uk/holidayjobs, email CMES@bathnes.gov.uk or phone 01225 394241
Next Friday 4th July the Bath Business Expo is open to visitors. The event showcases businesses from the region and is somewhere where you can connect with the local business community, get advice and support, inspiration, and source suppliers. The event is free of charge to pre-registered visitors, and you can sign up for your free tickets here: www.bathexpo.co.uk
As Associates of the Bath Business Expo, Cool Ventures are also hosting a networking event at 4pm. It is an open networking event and you’re welcome to join in. You can find more information and book your free place at it here: http://www.bathexpo.co.uk/book-visitor-tickets---networking-events.html
Cool Ventures will have a stand at the event, so come and see us if you can make it there.
Mailshot could cost firms thousands warn Trading Standards
Bath & North East Somerset Council’s Trading Standards department is warning local businesses not to respond to a mailshot that could result in a bill of almost £2,400 over a period of three years.
Pension contributions and childcare vouchers are the most commonly offered tax-efficient salary sacrifice benefit
Businesses are being advised to ignore a letter from a firm with a German address headed “Publication of Companies and VAT Registration Numbers in the UK Corporate Portal 2014”.
The letter claims that due to a change to the “EU Economic Package”, which requires all companies to provide their VAT registration number on various documents since 2010, the “UK Corporate Portal” is also required to update companies’ business data as a “basic entry”.
The letter also includes a form for businesses to check and sign to say their details are correct if they wish their entry to be a “non-basic entry”. However the small print indicates that a cost of £797 a year will be incurred by the business, for a minimum of three years.
Robin Wood, Bath & North East Somerset Council’s Trading Standards’ team leader, said: “We are concerned that local businesses may believe the letter to be from an official source, which is not the case. If businesses sign and return the form to confirm their details are correct they could end up tied in to the high costs of an entry in this publication.
“Businesses should be aware that they are not obliged to provide any information to the company and entries do not have to appear on the website referred to in the letter.”
If you want to report a scam you can contact the Citizens Advice Consumer Service on 08454 04 05 06
Benefits Research 2014 found that 87% of employers that offer benefits via salary sacrifice allow employees to make pension contributions in this way.
In 2009, 44% of employers allowed employees make pension contributions via salary sacrifice.
The study notes that this rise may be linked to auto-enrolment, with many employers now having passed their staging dates.
The survey of 256 employers also found that childcare vouchers have been the most commonly-offered tax-efficient benefit since 2009.
This year, some employers have offered childcare vouchers through a flexible benefits scheme and on a voluntary basis.
From autumn 2015, the childcare voucher scheme will be replaced by the Government's new tax-free childcare scheme. This will provide families with up to 20% of their childcare costs, or up to £2,000 per child.
Debbie Lovewell, deputy editor of Employee Benefits, said:
"The economic landscape has shifted significantly since we first conducted this research back in 2004. However, the reasons why employers offer benefits remain the same now as then: their effectiveness at supporting employee recruitment and retention.
"This is clearly linked to the top issue shaping benefits strategies in 2014. This year, nearly three-quarters (72%) of respondents told us that a desire to improve employee engagement was a key factor shaping their organisation's benefits package.
"Ensuring staff know the value of their package remains a key concern for employers today."
50% of VAT filing fines 'are wrong'
Half of all penalties for late VAT fining are charged incorrectly.
This is according to new research from UHY Hacker Young, which found that of the 17,200 automatic penalties levied by HMRC for late VAT return filing in 2013, 49 per cent were eventually overturned on review.
The total proportion of fines levied incorrectly could be much higher, as taxpayers must request a review in order for their penalty to be overturned.
UHY Hacker Young partner Simon Newark said: “HMRC’s late filing system starts off with the premise that the taxpayer is wrong – you then have to prove your innocence.
“In a lot of borderline review cases, where we feel the taxpayer should be given the benefit of the doubt, HMRC is now rubber-stamping the penalty.”
Mr Newark continued: “There is a breakdown of trust in the system, as businesses see the review process as HMRC ‘nodding through’ its own poor decisions in the hope the business will back down.”
According to UHY Hacker Young, HMRC’s systems are designed to automatically impose a fine for late payment, regardless of circumstances.
But the research suggests that businesses are less willing to challenge penalties. There were some 19,400 requests to review VAT decisions during 2013 – a 22 per cent drop from the previous year, and a 48 per cent drop from 2011.
Mr Newark added: “As the review system moves further away from its original aim of being a detailed and objective examination of potential errors, a greater number of businesses are finding that time spent battling with the tax authority over its mistakes is simply wasted.
“HMRC has a patchy record at tax tribunals, and is often rebuked by judges for its procedures and decision-making processes. Unfortunately, the cost of taking HMRC to a tribunal doesn’t make economic sense for a lot of businesses, and many poor or incorrect VAT decisions are left to stand for that very reason.”
Employee benefit records to be targeted by HMRC
HMRC auditors are to target records for employee benefits such as use of company vans and subsistence allowances when auditing company accounts, according to Paul Tucker, Partner at Smith and Williamson. Speaking at the Chartered Institute for Personnel and Development's (CIPD's) Reward Conference, Mr Tucker warned the audience that HMRC are placing renewed emphasis on benefits and rewards classified as 'taxable benefits'. He described allowances and the use of company vans as "easy targets".
Employer Bulletin Issue 48 out now
The latest version of the Employer Bulletin, issue 48, has just been published. This edition contains links to all the guidance you should need to help you complete and send us your expenses and benefits information and any associated payments.
To view the Bulletin go to www.hmrc.gov.uk/payerti/forms-updates/employer-bulletin
Many people have found the answers in the HMRC online learning course.
Get started with HMRC Online learning here
This course will help you understand what you need to do when you take on an employee, how to deal with PAYE tax and National Insurance and your other responsibilities as an employer. There are useful tips from others who have been where you are now and practical case studies to help you along the way.
It’s presented in bite size pieces so you can work through it at your own pace and when it suits you. You can dip in and out as you need to. You can even come back at a later date to check something if you need to. Why not save it to your favourites so that you can easily come back to it when you want to?