Question: I am the owner of a small business and I am concerned about the change to minimum wage within the new business rules which will come into effect on October 1. What will this mean for my business and what changes will I need to make to implement this?

Keith McManus, president ACCA (Association of Chartered Certified Accoutants) Ulster Branch replies:

It may sound trite, but you will need to comply and make sure that all your records are up to date and that your staff are paid the right amount of money, and that the right deductions are being made.

As a rule, new changes are always announced several months in advance in order to enable employers to get to grips with them and to make any necessary payroll changes in good time.

From October 1, the minimum wage for the adult hourly rate will go up to £5.80, the development rate will rise to £4.83, and the rate for 16 to 17-year-olds will become £3.57. As an employer, you have a duty to ensure that employees are paid the right salary and that the right deductions are being made. There is lots of advice out there, from chartered certified accountants, from Business Link, from the Directgov website and also from the Department for Business Innovation and Skills. And if you get it wrong, there are penalties, so it’s worthwhile checking if you’re not sure.

Question: One of our employees has a two-week holiday booked from next Monday. However he

broke his leg playing football last night and now wants to postpone his period of annual leave. Do we have to allow him to do this?

Lisa Bryson, an associate specialising in employment and pensions at Carson McDowell replies:

If you had asked me this question a week ago, you may have had a different answer. According to a decision from the European Court of Justice (ECJ) handed down last week, where a worker ‘does not wish to take annual leave during a period of sick leave, annual leave must be granted to him or her for a different period.’

In essence this appears to be saying that the worker has a choice as to whether to take holiday or sick leave in these circumstances. One factor for the worker may be whether or not they are entitled to full company sick pay or only statutory sick pay (SSP). If the entitlement is to SSP only, then some workers will still opt to take holiday (which is paid at normal rate of pay).

From an employer’s perspective, the ECJ decision raises more questions than it answers. For example, what if a worker falls ill after their holiday has started? In principle there is no reason why this situation should be treated any differently. However, in practical terms this could be a nightmare for employers to manage — what evidence of illness will employers require in order to have their leave reclassified? If medical evidence is produced showing that the worker would have been unfit for work this is likely to be sufficient.

Bigger issues may arise if the worker falls ill when holidaying abroad. We will have to wait for further guidance from the ECJ or the local courts before we have a definitive answer but until then I suggest that in such circumstances employers are entitled to require workers to produce evidence of their illness and that it would have rendered them unable to work before allowing workers to ‘reallocate’ holidays.

Question: VAT takes up a lot of my time, and I don’t really understand it. How can I save time without |simply spending more money on professional fees?

David Hill of TaxTroubleshooter. co.uk replies:

If your business has total sales (excluding VAT) of £150,000 or under then the Flat Rate Scheme may be just the ticket for you. You will save time and you may even make a bit of extra money with the taxman’s blessing!

The scheme means that HM Revenue & Customs does a deal with you. Instead of making you work out how much VAT you should pay to HMRC according to VAT rules, you pay an agreed fixed percentage of your sales. The current rates include 9.5% for entertainment or journalism and 5.5% for pubs, with a 1% reduction for your first year in the scheme. There is no disruption to your customers, who pay and reclaim (if appropriate) the VAT they pay in exactly the same way as before and at the same rate.

I understand that take-up of the Flat Rate Scheme is relatively low and, if so, I suspect it is because many eligible businesses don’t know the facts.

In financial terms it is true that there are both winners and losers under the scheme, but you or your advisor should be able to identify quickly whether you would be a winner or not. I suggest you have a look at the HMRC website at http://www.hmrc.gov.uk/vat/start/|schemes/flat-rate.htm#3 and ask your accountant or tax advisor whether you can join the scheme and if it is right for your business.