Question : I have invented a new kitchen implement that I think could be very successful. How important is it for me to get a patent for it before I speak to manufacturers?
Ian Wilkinson from Invest Northern Ireland’s Technical Advisory Unit replies:
A patent will give you a monopoly right for a set period of time to manufacture, use and sell your invention and gives you the right to stop others making, selling, importing or using your invention without your permission.
Your invention must not have been made public before you apply for a patent. Also you must be the legal owner. If you created it as part of your work as an employee, you are unlikely to be the legal owner.
A patent can be commercially beneficial but it will also be costly and the application process can be lengthy — typically two to three years. It’s also important to decide which regions you want to hold the patent for. Even if you hold a patent in the UK it will not stop exploitation elsewhere.
Applying for a patent involves filing your claims — precise statements about the invention you want to protect, and submitting an abstract — a summary of your invention. You must also pay a fee for a search to check whether any similar inventions have been published.
However, it is advisable to seek professional advice from a patent attorney. If you visit the Exploit Your Ideas section of www.nibusinessinfo.co.uk you’ll get a lot of information about patents.
Question: Is it true that I could pay a lot less tax if my business was a limited company?
David Hill of David A Hill Business and Tax Consulting replies:
Depending on individual circumstances a business and its owners could save thousands of pounds annually by incorporating — or could end up paying more in overall taxes!
There are many factors to consider. As regards tax, however, you need to consider all relevant taxes, and I would include National Insurance Contributions (NIC) in this. Although a company has no “tax-free” personal allowance, the rate of Corporation Tax payable on the first £300,000 of profits, at 21% for 2009/10, is much lower than the Income Tax higher rate of 40%.
For a sole trader or partner, tax is charged whether the profits are drawn or not. However, company money usually has to be taken out before it is taxed at personal rates, so if trading profits are largely retained or reinvested the company structure is likely to be a tax winner. Conversely, when a company director receives all business profits as salary only, the combined Income Tax and NIC — due from both employer and employee — will be higher than a self-employed person will pay.
For a company director/shareholder there is the opportunity to save NIC by taking a significant part of the personal money required in the form of dividends. However, as dividends are the fruits of ownership of a business and not remuneration for working in it they will not generally count as relevant income for mortgages or other borrowings so will not suit everyone.
Given all the possible factors there is no simple answer to this question. Reviewing your business and personal circumstances with your professional advisor is an essential step in finding the answer that is right for you.
Question: Can we instruct our employees not to come to work if they have swine flu?
Lisa Bryson an associate at Carson McDowell and specialising in employment replies:
In normal circumstances, employers are not entitled to stop employees from coming into work unless stated in the contract of employment.
Following previous concern over SARS and avian flu, we have seen some companies introducing ‘exclusion' clauses into contracts to exclude employees in certain circumstances.
Strictly speaking, if the contract is silent on this issue, unilaterally imposing changes to an employee's working conditions is likely to constitute a breach of contract and could give rise to claims for constructive dismissal.
That said, in the circumstances I would suggest that this may be a necessary step for employers given the duties placed on employers to take steps to ensure the safety of employees.
Instructing an employee to stay away from the workplace will clearly amount to a lawful and reasonable instruction.