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Digital on-line sellers: have you got to grips with the new VAT rules?

Tuesday, February 2nd, 2016

The new VAT rules have been in effect for over a year now and yet not many businesses are aware of them. In a nutshell a business may have to pay VAT on its sales even though it is not registered for VAT AND at a higher rate than the UK! How is this possible? In order to stop global companies from basing themselves in countries with lower tax rates, the lawmakers decided to create a level playing field for UK businesses by making them pay VAT on sales of digital products to the EU  at the rate applicable in the country they are selling to!

So how do you know if the rules apply to you? Find out in 5 easy steps:

  1. Determine whether you are supplying a “digital service” (because if it isn’t, the general place of supply of services rules will apply).
  2. Determine the status of your customer ie, business or non-business. If it is a non-business, the rules apply
  3. Determine the place of supply (ie, the member state).
  4. Determine whether the supply must be taxed at the member state’s standard or reduced VAT rate, or whether it is eligible for any VAT exemptions (eg, most member states exempt betting and gaming).
  5. You need to identify the place where your consumer is based, has their permanent address, or usually resides. This will be the member state where VAT on the digital services supply is due. So if, for example, a UK citizen is an ‘expat’ who works or lives most of their time in Spain, then you, as the person supplying digital services to that consumer, should be charging Spanish VAT on those services and not UK VAT.

There is a handy flow chart to help you decide whether the rules apply to you or not here.

For more information go to the government hub here

 

New rights for consumers coming soon! Get ready or face a fine..

Friday, July 24th, 2015

Have you heard about the new Consumer Rights Act coming into force on 1st October 2015? It creates a number of new consumer rights in relation to the sale of goods, services and digital content by traders to consumers.

We are updating our terms of business template now to ensure it is in line with the new law. Get in touch if you’d like us to help update yours! In particular, CHECK YOUR REFUND POLICY!

Here’s a brief summary to help you ensure you’re not falling foul of the law.

Consumer Rights image

Don’t wait until you are in court to sort it out!

If you sell goods

  • Along with all the existing standards like fitness for purpose, satisfactory quality, correspondence with description, goods must match a sample, there are new standards, including:
  • Goods must match a model seen or examined by the consumer, except where the trader has brought differences to the consumer’s attention.
  • New standard for installed goods – they will not conform to the contract if they are installed incorrectly.
  • A new right to reject faulty goods within 30 days for a full refund (NB this does not apply to perishable goods). You can extend this deadline, but you can’t reduce it.
  • Where a consumer prefers a repair/replacement, the time limit for a right to refund is paused until the goods are returned by the trader. If the item still doesn’t conform to the contract upon return, then the consumer’s right to reject is extended by a minimum of 7 days.
  • Once the 30 days has passed, traders now have one opportunity to repair or replace the faulty item, after which, if repair/replacement is not possible or successful, the consumer can request money off or reject the goods for a full refund.
  • After the first 6 months, any refund may be reduced by a deduction for use to take into account the use the consumer has had of the goods. However, if they make the request for a refund within 6 months, traders will not be able to make a deduction for use for the majority of goods.

If you supply Digital Content

Digital content includes paid for content and content that comes free of charge with physical goods.

  • A new right to repair or replacement if the digital content is faulty.
  • If the fault can’t be fixed within a reasonable time, or without causing the consumer significant inconvenience, they can get some, or all of their money back.
  • If they can show the fault has damaged their device and the trader hasn’t used reasonable care and skill, the consumer may be entitled to a repair or compensation.
  • The consumer has a right to a refund if the business does not have the right to provide the digital content.

If you provide Services

  • Consumers have a new right to ask the trader to repeat or fix a service if it’s not carried out with reasonable care and skill, or get some money back if they can’t fix it within a reasonable time.
  • If services aren’t provided within a reasonable time, they now have a right to a price reduction.
  • If a price has not been agreed upfront, what the consumer is asked to pay must be reasonable.
  • If a time hasn’t been agreed upfront, it must be carried out within a reasonable time.

 Special points to note:

  • Do you know about the pre-contract information requirements set out in the Consumer Contracts Regulations? They are implied terms, which means they apply automatically and if you haven’t given all the necessary information to the consumer before they enter into a contract with you, you will be in breach of contract and liable for refunds. Ask us if you aren’t sure what we’re talking about!
  • Terms governing price and subject matter must be prominent and transparent in your terms of business. So you cannot reduce them in size and hope nobody notices!
  • Law enforcement agencies will be able to obtain a court order if you fail to comply with the Consumer Rights Act. If you do not comply with such a court order, you may end up with a penalty of an unlimited fine and/or two years imprisonment. So it’s a good idea to get to grips with the new law ahead of 1st October!!

Doing business on-line? Know your customers’ rights

Monday, January 7th, 2013

The European Commission has published a code of EU online rights, which sets out in one place all the rights which EU consumers have when using online services and when buying goods and services online. With the focus on consumers, the code sets out all the relevant rules with which online traders must comply, including those derived from the general rules on the supply of goods and services to consumers.

EU consumer rights online

It summarises, for example, a consumer’s right to receive certain information before concluding a contract online, rules on fair and unfair contract terms and delivery of goods, rights in respect of defective goods, rules on withdrawal from online contracts, and a consumer’s rights when in dispute with an online trader. This will be a useful  compliance checklist for all businesses trading on-line.

First the cookie monster, now the jam jar police!

Tuesday, October 30th, 2012

In these times of recession and trying to save money, you would have thought that going back to traditional skills of jam making and selling the fruits of one’s labour at farmers’ markets or for charity would be welcomed. Many retailers have reported a large surge in jam-making equipment over the past few months and even model Kate Moss and the Duchess of Cambridge are reportedly taking up the pastime. Our European law makers across the Channel evidently disagree. They have enacted a law that prohibits the re-use of jam jars! Containers may only be used commercially if they have been designed for that use. As jam jars are not technically sold for re-use, then technically they cannot be re-used!

Beware the jam jar police! Photo by Alamy

No doubt the intent behind the law was to protect against food contamination, but surely common sense must prevail. Do we need laws to tell us not to sell milk in old petrol cannisters, for instance? I think not!

Will Singapore become the “entrepreneurship capital” of South East Asia?

Monday, May 28th, 2012

There are various reasons why entrepreneurship has not traditionally thrived in Asia.  Relatively speaking, US culture regards failure in business as a positive part of the learning process, and therefore Americans are more inclined to take risks.  Asian culture, however, is less forgiving of failure.  In addition, Hugh Mason (Chief Executive of Joyful Frog Digital Incubator (JFDI)) explains that the traditional method in Asian schools is “all about getting the right answer”, and that “being smart sometimes weighs against entrepreneurship”.

Traditionally Singapore has been considered by many in the business world as a gateway to South East Asia, as it represents a relatively small market of five million people.  Investors often choose to temporarily place their money in Singapore before investing in larger markets in the region such as Indonesia, Malaysia and the Philippines.  However Angel investors and venture capital funds are increasingly seeking investment opportunities in Singapore itself.

A growing number of educational institutions are running entrepreneurship programmes and providing mentoring opportunities; and the Singaporean government are actively removing regulatory barriers in a bid to encourage entrepreneurship.  Ron Mahabir (found of Asia Cleantech Capital) states that “While the government has done a great job of loans and grant programmes, culturally it’s very difficult to push entrepreneurship very quickly.”  Change, however, is undoubtedly underway in Singapore.  In fact, according to the WorldBank, Singapore ranks at Number One in the world “for ease of doing business, and Number Four “for starting a business”.

Singapore-based JFDI is working in partnership with SingTel [a subsidiary of a major telecommunications company] to run an accelerator programme for start-ups from around Asia.  This program allocates start-up teams from around the South East Asia with mentorship from experienced entrepreneurs and specialists for 100 days, after which the start-ups can pitch to investors.  Wong Meng Weng (who helped start JFDI) says, “I see Singapore as the technology and start-up capital of South East Asia, not unlike the US where you recruit from around the world and get them to come into Silicon Valley”.

The Recession can be Good for You!

Tuesday, May 22nd, 2012

Founded by husband and wife Juliette and Russel Joffe in 1998, the restaurant chain Giraffe has not only thrived throughout recent economic crises; rather, Mr Joffe insists the recession “has been positive for us”.  He states, “It has enabled us to review our strategy.  This is an opportune time to review your business – and aspects that you might forget in good times.”

The Joffes’ advice for not only surviving but possibly benefiting from times of austerity, are as follows:

Get best supply prices:

“We have gone back to some of our original mission statements; reviewing our staffing, talking to suppliers to get the best prices”

Run a tight ship, but don’t let this compromise the quality of your products or services:

“We don’t cut corners or cut costs.  Everyone has to run a tighter business today.  The ones that cut corners and costs are the ones that will suffer long-term because standards of service will decline.  You need to keep the investment and innovation going. It is important that people see you moving forward rather than stagnating.”

Give customers a good deal:

We have also been offering vouchers and deals. It’s the norm today. When people go out to eat, they think: ‘Where is there a voucher?’ We have been focusing on our service and offering customers the best value for money that we can”

We are producing a better bottom-line profit by running a better business. We haven’t let go of any staff as such, just increased sales and not overheads.”

Beware of the cookie monsters!

Monday, May 21st, 2012

On 26th May 2011 the new EU Cookie law came into force which applies to all website operators who use “cookies” to track their visitors’ movements and choices around their site. Sadly these are not the edible variety otherwise there wouldn’t be such a fuss!  A cookie is a small file of letters and numbers downloaded on to a device when the user accesses certain websites. Cookies allow a website to recognise a user’s device such as a mobile or computer and will assist with logins or enhancing the shopping experience. Say you go to Amazon and browse books on travel to Eastern Europe. A cookie will ensure that next time you visit their site, titles are suggested to you on exactly that subject. Think of a cookie as a little piece of memory.

Beware of the new cookie laws!

Source: itsnicethat.com

The previous rule on using cookies for storing information was that you had to:

  • tell people how you used cookies, and
  • tell them how they could ‘opt out’ if they objected.

Many websites did this by putting information about cookies in their privacy policies and giving people the possibility of ‘opting out’. So they basically kicked in automatically unless you objected.

The new law requires website operators to make sure they have their visitors’ “informed consent” for the use of cookies. This must be in place before 26th May 2012.The changes aim to give users more choice and control over what information businesses and other organisations store on their computers and how they track users.

What should you do now?

  1. Establish what cookies, if any, you have on your website. You may have had the site developed for you and so you need to ask your website developer what cookies they used. See the checklist below for what you need to identify.
  2. If you do have cookies, decide which ones are essential for your visitors’ use of your site. For example, a cookie that tracks what a customer puts in their shopping basket would be considered essential and therefore may not need the customer’s express consent. A non-essential cookie that tracks that the customer had a good browse in home furnishings  before going to children’s’ wear on the other hand may be considered intrusive and therefore require express consent.
  3. Draw up a plan that shows that you are addressing the use of cookies and that you are putting into place a procedure to comply with the new law. This will be important if the ICO does come after you.
  4. Establish how you will get a visitor’s consent to the use of cookies. One option would be to have pop- up box that alerts users to cookies and asks them to agree. Alternatively, the ICO have said that getting users to agree to your Terms of Use/Privacy Policy would also work. However, instead of just displaying them as a link on your website, you would need to get them to tick a box, indicating their express acceptance of them or draw attention to the terms e.g by addign NEW next to them or re-naming your Privacy Policy as ‘Privacy and cookie policy’.
  5. Check that your Privacy Policy spells out exactly what information is being collected by cookies. The bottom line is that you need to be upfront with users about how your website operates. Our ‘oven-ready’ Privacy Policy template can help you do this.

Checklist for cookie audit

  • Cookie ID: ID of the cookie as it appears in the browser cache.
  • Cookie name: label of the cookie.
  • Cookie type: “session” or “persistent Session cookies just remain on a device for a website visitor’s visit whereas persistent cookies remain on the device even after the session ends so that when a user returns to a site, he/she will be remembered
  • Cookie life: if persistent, how long does the cookie last?
  • Cookie owner: first party or third party i.e. has it been placed by the website owner or a third party with whom the website owner has linked up
  • Source domain: domain that the cookie is associated with.
  • Data collected: type of data each cookie collects and whether it links to other information held about users.
  • Purpose: what the cookie is used for.
  • Any tracking? Does the cookie allow tracking across a number of websites?

So in this ever-increasing age of Big Brother and seemingly unfettered trend towards monitoring all of our movements, I believe this law is a move in the right direction. It shows that not everything we do in the e-commerce space needs to be recorded or tracked. We should be free to shop as we please. Just imagine if there were cookie-type robots in real life that stepped out as we entered a shop. I have visions of a middle aged man entering a department store with his stout, middle aged wife and the robot exclaiming: “Ah, Mr Brown! Welcome back! I know last time you visited our shop, you spent half an hour in the lingerie department. Would you like me to take you straight there this time? We still have that little size 8 leopard skin number you liked.” Could lead to all sorts of interesting conversations with his wife ….

Is your promotional material legal?

Monday, May 21st, 2012

As many of Off To See My Lawyer clients are running businesses related to the health industry, we thought you may be interested to hear the outcome of a particular recent Advertising Standards Agency enquiry.  Six complaints were made about the claims of Miruji Health & Wellbeing’s product “Sit & Slim”.  Miruji Health & Wellbeing had made claims in an advertisement in the local press, and on their website, that their “slimming and therapeutic massage chair and programme” had been clinically proven by the NHS to induce weight loss, relieve stress, and lower blood pressure.  It even went on to say that the chair could provide a solution to obesity.

The ASA established that there had in fact been no formal NHS clinical research.  A casual study had taken place at a mental health hospital among staff participating in a free trial.  The hospital in question did not treat obesity.  Therefore this aspect of the advertising claims being made by Miruji Health & Wellbeing was a misleading endorsement, and as such held to breach two of the CAP Codes.

With regards the claims that the chair could treat high blood pressure, the ASA considered that high blood pressure is “a medical condition for which advice, guidance and treatment should only be conducted under the supervision of a suitably qualified health professional”.  The advertisements therefore also breached one of the CAP Codes (- in this case, the “Medicines, medical devices, health-related products and beauty products” rule).

On the subject of obesity treatment, and the claims that customers could lose weight using the chair and programme alone – the advertisements were held to have breached the CAP Code relating to “weight control and slimming”.

If you have any concerns about the legality of your own advertisements or the claims you make in your promotional material, please contact Jo Tall via jo@offtoseemylawyer.com and she will provide you with appropriate advice relating to the CAP Codes, and any other legal issues that require consideration.

Female Entrepreneur Focus: Gennese Williams

Wednesday, May 16th, 2012

The test for a true entrepreneur is to see whether the person in question has turned an adverse situation into a successful enterprise.

When Gennese Williams lost the sight of both her eyes in 2007, she decided she could no longer work for anyone again.  Far from burning her bridges, however, she built upon her existing experience in beauty, music and management to start her own business, MGW London.  She merrily believes in the mantras, “What you think you are worthy of, is what you will attract”; and “You change your reality when you change your mentality”.  In addition, when times are especially difficult, she recommends taking a break and “switching off from everyone” in order to recharge one’s motivation and creativity.

MGW London is an ambitious management and business consultancy agency.  In addition it has its own in-house production, make up, hair stylists and fashion stylists’ team, and a graphic design team (run by her brother); and together they provide a range of services to manage events, projects and brands.

Ms Williams says that the most effective way of attracting clients is by word of mouth and personal recommendations.  In addition she favours social media as it gives prospective clients “the freedom to check me out before they approach us”.

Her advice to other business owners is to remain dedicated to clients; to “be professional at all times, master your craft and listen to your clients’ needs”; and to “always be steps ahead to achieve the best and don’t sleep until you know the job is complete for that day”.

Can you afford to start up your own business?

Tuesday, May 15th, 2012

If you have any misgivings about whether you can afford to start up and run a business, Jo Tall will happily meet you for a preliminary consultation.  Off To See My Lawyer are proud to have successfully helped launch many small businesses – but equally we take pride in our honest and realistic advice.  If we consider that you will be taking too many risks (– financial or otherwise) we will let you know.

Here is a non-exhaustive checklist to help you assess whether you can afford to start a new business:

  1. Off To See My Lawyer provide an extremely cost effective service, but please consider whether you are able to afford legal advice.
  2. You may wish to pay for other professional advice, such as from an accountant, or a web designer, and/or advice from PR experts.
  3. You may require professional assistance in order to draft your initial business plan, and/or business plan software.
  4. Most banks incur a small fee in order to open a business account.
  5. As you would expect, there are fees incurred for incorporating a business into a company; for registering a trade mark; for registering yourself as a data controller; etc.  And you may need to purchase certain licenses and permits in order to run your particular business.
  6. You may wish to insure your business or assets.  Premium rates are variable.
  7. If you wish to rent or buy the premises from which you will run your business, you will need to consider these costs – as well as utilities bills.
  8. The costs involved in promoting your business will add up.  For example – stationery and printing; professional branding/advertising advice; etc.
  9. Machinery and equipment, and IT systems are pricey but necessary assets.
  10. It very much depends on the type of business you are running – but you may need to pay for materials from which to manufacture your products, or stock for wholesale.
  11. Of course, once your business is up and running, you cannot pocket every incoming penny, as there are various taxes to be paid!

While the intended outcome of employing staff is to increase your profits, employees add to your list of burdens and liabilities.  You will need to draft contracts of employment, deal with relevant taxation issues, invest in time (and perhaps money) in training your staff, etc.