TM writes: I have recently been interviewing people for a vacancy in my
company and am now in a position to offer the successful applicant a
position. Is there a specific process I should follow when offering the job?
Do I have to send letters to the unsuccessful applicants explaining my
decision? And can I keep applicants’ details on file in case another vacancy
arises?
You are not required by law to send out individual rejection letters. The
standardisation of such letters helps to make this part of recruitment
simple and they can be sent at any stage,writes Peter Done, managing
director of Peninsula.
You may choose to send some candidates a holding letter. This is a temporary
measure that is usually used when waiting for an acceptance letter from the
successful applicant or until he or she starts in the job. Avoid telling the
whole truth in a holding letter as any prospective employee would not like
to be considered “second best” and you should follow up this letter with a
rejection or offer letter as soon as possible.
You are permitted to retain application forms from those who have been sent a
holding letter and these are often used as way of “short circuiting” the
recruitment and selection process if the person you hired proves unsuitable
or if a similar vacancy arises in the future.
When it comes to informing the successful applicant, you must remember that
when a verbal or written offer of employment is made and accepted a contract
exists. As an employer you are required by law to issue an individual
statement of the main terms and conditions of employment within two months
of a new employee’s commencement date. It is important therefore that the
offer letter contains details of any particular terms and conditions offered
at the interview so that there are no misunderstandings.
Choosing the right year end
PC writes: I have started a business with a couple of colleagues. We have
set up as a partnership and are thinking about what the year-end for the
business should be. We started to trade in July and had intended to produce
our first accounts for the period to June 30, 2009. Is there any tax
advantage to having a different year end?
When you start a new partnership you will run into some complicated tax rules,
writes Chris Lane, a partner in Kingston Smith LLP. This is because the
first year’s accounts are used to calculate your tax liabilities for the
first two tax years.
You started to trade in the tax year ending April 5, 2009 but you will not
have an accounting period that ends in that year. Therefore, the Inland
Revenue will tax nine months of the profits for the year ending June 30,
2009. Then for the following tax year (ending on April 5, 2010) the profits
in the accounts for the year ending June 30, 2009 will be taxed again in
full.
From then on, your tax liabilities in any one tax year will be based on your
12-month accounting period.
The nine months of profits that are used twice are recorded on your tax return
and called “overlap relief”. This relief can be used against the profits
that fall into tax when you cease to be a partner in the business.
This method means that there is a delay in the taxation of your profits each
year at a cost of the tax on the overlap profits.
If you choose a year-end of March 31, which the Inland Revenue accepts as the
end of the tax year, then the tax calculations are a lot simpler because the
accounting profits will be for the same period as the tax year and there
will be no overlap calculations. The disadvantage of this year end is that
you will pay your tax liabilities on profits a year earlier.
You should also consider other factors such as seasonal trading and holidays
to make sure your choice of year end is convenient.
Kingston Smith LLP, the chartered accountant, and Peninsula, the
employment-law firm, can advise owner-managers on their problems.
Send questions to The Business Doctor, The Sunday Times, 1 Pennington Street,
London E98 1ST, or fax to 020 7782 5765. Advice is given without legal
responsibility.
bizdoc@kingstonsmith.co.uk
