If you’re interested in opening a new shop, cafe or restaurant in the UK you need to be aware of your legal obligations and the regulations that govern your industry. Getting a grasp on these laws, and getting sound legal advice, will help prevent you from making costly mistakes that could ruin your livelihood.
In this article, we’ll cover some of the major pieces of regulation that new companies will need to comply with and what they mean for your business. It is by no means comprehensive and is intended purely to provide an overview.
Business Rates, National Insurance and Pension Contributions
Registering your business: To operate as a business you must register a business first. Sole traders and partnerships are easier to set up however you will be personally responsible for the company’s debts. If you set up a limited company, its finances are separate from yours but it does entail additional reporting and management responsibilities. If you are a Limited company you must follow the Companies Act 2006.
In addition to keeping company records and reporting changes to Companies House, you must file your accounts annually, your tax returns and pay Corporation tax.
Employers must pay National Insurance contributions on their employees’ earnings and benefits. They are also responsible for collecting employees’ Class 1 National Insurance contributions and income tax deductions through the PAYE system. Additionally, all employers must offer a workplace pension scheme by law.
Businesses must pay Non-domestic rates (also called business rates) which are a tax on business property to help pay for local council services. The money collected from the rates is pooled nationally and redistributed among local authorities according to factors including population and need. Both the Scottish Government and the UK Government have business rates calculators and offer differing relief.
You must register your business for VAT with HM Revenue and Customs (HMRC) if its VAT taxable turnover is more than £85,000.
Public Liability Insurance protects your business against compensation claims and their legal costs if you cause injury (including death) to a third party or damage to their property. It is not a legal obligation to have Public Liability Insurance but it is highly recommended as it can protect your business from having to pay out substantial cash sums.
All contractual relationships between consumers and retailers are governed by standard regulations designed to create a level playing field between both parties.
Sales of Goods Act: Goods you sell must be of reasonable quality, fit for their intended purpose and match any descriptions you provide. If these requirements are not met the consumer has the right to request a refund, repair or replacement.
Unfair Terms In Consumer Contracts Regulations: Your terms and conditions must be expressed in clear English, accessible and fair. Examples of terms that may be deemed unfair include: terms which limit or exclude the retailer’s liability for delays or failure to perform, terms which allow the retailer to change prices on a whim and unfair cancellation terms.
Consumer Protection from Unfair Trading Regulations: Retailers must avoid indulging in misleading or aggressive sales practices. This regulation outlines a list of 31 blacklisted practices such as making persistent and unwanted communications via telephone, fax or email, creating advertisements that encourage children to ask their parents for your goods and advertising something as “free” when there are hidden charges.
Every business that holds personal information in the UK needs to register with the ICO and pay a Data Protection fee. These fees range from £40 to £2,900 depending on turnover and staff numbers, among other factions.
The General Data Protection Regulation (GDPR) is an EU-wide regulation considered to be the world’s strongest data protection rules. GDPR enforces the rights of consumers to see which data is being held about them. Consumers can now perform a Subject Access Request, where a business must disclose all information held about the customer within one month for free (previously these requests cost £10).
GDPR operates on a consent driven model, where businesses must ask for consent to store certain types of data for certain purposes (for example, using your email address for marketing purposes). Businesses must now be able to justify why they store certain types of data.
Most importantly, businesses found to be in breach of GDPR are subject to fines of up to
€20 million, or 4% of a company’s global turnover (whichever number is greater).
The Equal Opportunities Commission provides a handy outline of the rights employees have. By law, all workers have a number of rights.
Major rights include:
- No discrimination in the workplace.
- Pay employees at least the national minimum wage.
- A right to daily and weekly rests.
- A right to a safe and clean working environment with first aid equipment, protective clothing, drinking water and washing facilities and ensuring all machinery is safe.
The Sale of Food and other licenses
Depending on your business type you may require additional licenses to sell certain goods or services or be subject to additional regulation and inspection.
In the hospitality industry, those looking to sell food that is cooked on premise must:
- Receive food premises approval
- Have a Food Hygiene Certificate
- Have a PRS for Music licence (if you intend to play music)
- Have an alcohol licence (if you intend to sell alcohol)
Every local authority has a list of its various business licenses. Food, alcohol, entertainment and gambling tend to be the most regulated premises but selling items such as knives, poisons or fireworks require additional licenses. Street traders and market operators may also require licenses.
Unfortunately, no guide will provide which regulations that your business specifically has to follow – you’ll probably need to consult a lawyer to find out exactly what applies to you. The main thing to emphasise is that regardless of the size of your business you will be subject to several, if not many, different laws and regulations. Breaching these laws could leave you at the risk of fine or potential imprisonment so it is incredibly important to know as much as possible before you open your business.
At RMS, we take GDPR compliance seriously. Our affordable Android EPOS, RMS-Register, is GDPR compliant by default.
Are there any must-know laws for retailers you think we missed out? Leave a reply below.
*Information accurate at the time of publishing. RMS is not a law firm – consult a lawyer when you need legal advice.