JS writes: During the recent snow many of my staff had problems getting to
work, but one of my employees, who lives locally, called in sick, claiming
it was impossible to attend work. His attendance is already poor and it
seems he has taken the winter weather as an opportunity to skive. Can I
dismiss him?
The fact that someone lives locally does not necessarily mean it is easy for
him to get to work, writes Peter Done, managing director of Peninsula. The
weather and roads can be significantly different across a distance of only a
few miles. Perhaps other staff who travel through that area could confirm
the status of the roads and so help you assess if the worker’s contention
about his difficulty in getting to work was genuine.
His health has nothing to do with the state of the roads. If he is unfit to
work, you must deal with his absences under your sick-pay rules.
The dismissal procedures are there for a reason and you must never skip them,
even if someone has less than a year of service. It is not clear from your
question how close to having been with you for one year he is, and you need
to take into account what his length of service will be when his notice
period is included. If these figures combined give him a year’s service, you
risk a claim for automatically unfair dismissal if you sack him without
following procedures.
It should not take more than a week to go through a fair-dismissal procedure
and this will allow you to make sure that there are no explanations for his
poor attendance and performance that you need to take into consideration.
A PARTNERSHIP COULD CUT TAX
PJ writes: I own a limited company but am now considering a new venture. I
don’t know whether to set it up as a company or a limited liability
partnership to keep my tax to a minimum.
Your decision could affect the taxation of your existing company as well as
your new business,writes Jon Sutcliffe, partner at Kingston Smith LLP. If
you control more than one limited company, this will reduce the
small-company limits for corporation tax and could increase the rateat which
profits in your existing company are taxed – potentially from 21% to towards
28% this year. Thus, a new company could greatly increase your overall
business and personal tax bills.
Profits arising in a limited liability partnership (LLP) would not affect the
existing company’s corporation tax. They are taxed on the LLP’s members as
self-employed income. As a higher-rate taxpayer, you will be liable to
income tax at 40% and Class II and IV National Insurance. Taxes are paid
under the self-assessment system in January and July each year. For 2009-10
onwards, an LLP will very often, but not always, be more tax efficient than
salaries or dividends from a company.
Salaries are generally the most expensive for tax purposes because of the
employer’s National Insurance bill, which at present is 12.8%, and the
combined company and personal tax on dividends make them less tax efficient
than they used to be.
If you are concerned about having cash set aside to meet future tax
liabilities, this will be an issue for both the LLP and dividends, but not
for salary. An alternative to setting funds aside in a personal bank account
might be to set funds aside in the company or LLP when you draw dividends or
as profits are earned.
The best solution for you will depend on your circumstances and the profits
and cash requirements of the businesses. A further consideration is whether
the new business will make a loss in its early years; in that case the LLP
route can allow some personal tax relief against your other income.
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
