BK writes: I run a small cleaning company that has contracts with three clients. One of these has told me to remove a particular cleaner from his site and never let him return. The individual concerned appears to have committed only a minor offence. I have nowhere else to place him as the other two contracts are too far away. What can I do?
This is a fairly common problem, writes Peter Done, managing director of Peninsula. First you must deal with the misbehaviour of your employee and follow your disciplinary procedures.
If he does not have a satisfactory explanation, give him the appropriate warning. You say that his transgression is a minor one so the warning should probably be a verbal one or a first written warning.
You must then contact your client, explain that you have taken disciplinary action against your employee. Assure him that you are confident such an incident will not happen again and ask that the man be allowed to return to the site.
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If your client agrees, the problem is solved. If, however, he refuses to allow the cleaner back, you must request that he reconsiders because you have nowhere else to place the cleaner and would have to dismiss him.
Clearly, this would not be fair for what is a minor offence. But if your client refuses to have the man back, you will have no alternative but to dismiss the employee with notice or pay in lieu.
Tribunals require that the employer in such situations makes every effort to persuade the end user to allow the employee to return or, if that is not possible, a tribunal expects the employer to look at alternative posts.
Unfortunately, you have said it is not possible to transfer him to one of your other contracts.
It is important that employers who send employees to a client’s site should have comprehensive contracts of employment that set out clearly the standards required of the employee on those sites. For example, it would be normal to include rules such as the employee is not to use a client’s telephone for personal calls and that such action would be regarded as gross misconduct. In such a case you would be able to dismiss an employee for breaching your own rules.
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VAT BEWILDERS HOME WORKERS
MW writes: I am self-employed and work from home. This is a flat of which I own the freehold, but I have to pay maintenance charges to a central committee.
For convenience I keep one set of accounts for both income tax and Vat returns. Many years ago
I agreed with both the income-tax and Vat inspectors that it was permissible to make the business pay part of some expenses, such as insurance, electricity, maintenance charges, rates and some other items. I could then set these charges against tax. Generally, I work out how much space in my home is being used for the business and charge acccordingly.
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Recently, however, I have heard that this is not permissible where Vat is involved. I was told that Vat expenses must be incurred as a full charge. In other words, if I want to claim back Vat on something, all the money must have been spent on the business or it is not allowable. Is this so?
Although both your income tax and Vat are dealt with by Revenue & Customs, they are treated in different ways, writes Jon Sutcliffe, partner at Kingston Smith LLP.
The general rule for income tax is that if an expense relates to both personal and business use, you can set the business portion of it against tax. To charge business costs according to flat space is fine.
The Vat matter is much more complicated. A Vat business brief was issued on August 9, 2005 and provides useful guidance in this area. It states that Vat on services purchased for day-to-day activities, such as repairs and maintenance, must be apportioned between private and business use. However, you will need to make sure it is clear that the money was spent for the needs of the business and not your personal needs. The non-business element would then be calculated and the Vat on that private element would be irrecoverable. So if the purchase is made by you as an individual, no Vat is recoverable on that cost.
You could seek to renegotiate the agreement you have on Vat but, because the amounts are probably small, you may choose not to upset it.
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Once you have agreed how Vat is to be treated, this will determine the actual costs incurred by your business and determine what you include in your accounts and tax return.
Kingston Smith, the chartered accountant, and Peninsula, the employment- law firm, can advise owner-managers on their problems. If you have any questions, please send them to Business Doctor, The Sunday Times, 1 Pennington Street, London E98 1ST or fax them to 020 7782 5765. Advice is given without legal responsibility
bizdoc@kingstonsmith.co.uk