On the radar: items for the agenda - Summer 2015

This article was produced by Olswang LLP, which joined with CMS on 1 May 2017.

Did you know…?

…that new law is in the pipeline which will require larger businesses to disclose in each financial year the steps they have taken to ensure that there is no slavery or human trafficking in their businesses or supply chains (or that they have taken no such steps)? The requirement is included in the Modern Slavery Act 2015, the Government’s landmark legislation in its crackdown on slavery and trafficking.

The broadly-scoped legislation will catch commercial organisations - wherever they are incorporated or formed - which carry on a business, or part of a business, in the UK and which supply either goods or services in any sector. The requirement will apply to larger organisations with a total turnover of £36 million or more. The Government believes larger businesses should have the resources needed to undertake the due diligence and other steps needed to meet the requirements and the purchasing power to exert real influence on supply chains.

The Government is working on guidance to help businesses prepare their slavery and human trafficking statement, which may include information about their policies, due diligence processes, risk assessment, performance, training and other matters. The statement will need to be approved at the top level of the business (e.g. for companies, at board level) for publication on the business’s website or, where the business does not have a website, for provision to anyone who requests a copy.

We are expecting the new law to come into force in October 2015, with the guidance being published at the same time. To give businesses sufficient time to prepare, the Government has indicated that organisations will not be required to produce a statement where their financial year end is close to this date.

…that further measures are on the horizon to help combat late payment practices by larger companies? Late payment by larger businesses is seen as a significant issue - according to a recent Government consultation, in June 2015, £26.8 billion late payment debt was owing to small and medium sized businesses, with significant implications both for these businesses and the economy as a whole. The government’s initiatives to address this problem include:

• proposed new regulations to require large quoted and private companies, and large LLPs, to report on their payment practices from April 2016. The Government has indicated that it will expect large businesses to report half-yearly on a number of matters including their standard payment terms; the average time they take to pay; the proportion of invoices paid beyond the agreed terms; and the proportion of invoices paid in 30 days or less, between 31-60 days and beyond 60 days. The Government is currently developing regulations, IT systems and guidance and we are expecting to hear more on this in the near future; and
• plans to introduce a new Small Business Commissioner to support small businesses in their dealings with larger enterprises. Under the current proposals, the Commissioner will provide information and general advice to help small businesses to protect their interests and resolve disputes, offer a voluntary mediation process and deal with complaints. The proposals would also give the Commissioner a role in relation to larger companies - monitoring the payment data published by them and publicly naming the best and worst performing businesses.

Larger businesses will need to review their policies and put procedures in place to comply with the new reporting requirements once they have come into force. Smaller businesses may be able to take advantage of the new services when they become available and the new information to be published on larger businesses’ payment practices. The Government has issued a consultation on the role of the proposed Small Business Commissioner here and is encouraging businesses of all sizes to respond by 21 August 2015.

…that employers with 250 or more employees will soon be required to publish gender pay gap information? Shortly before the general election, the Small Business, Enterprise and Employment Act 2015 was passed. This included a provision compelling the Government to make regulations under the Equality Act 2010 to require larger employers to publish information on whether there are differences in the pay of their male and female employees.

The Government has now launched a consultation seeking views on the format and level of detail of the information that employers should be required to publish under the proposed new regulations. Views are also sought on how frequently employers should be required to publish the requisite information.

The consultation (which can be viewed here) closes on 6 September 2015 and we can expect to see draft regulations either later this year or in early 2016. The Government has indicated that it intends to give businesses time to prepare for implementation before the regulations are commenced.

…that French subsidiaries of companies in the UK and other EU territories may be able to take steps to claim a refund if they have paid the French 3% tax on distributions?

Since August 2012, distributions made by companies which are liable for corporate income tax in France (other than small and medium sized enterprises) have been subject to a tax on distributions equal to 3% of the total amount distributed. This is payable by the French company making the distribution. We have now heard that the European Commission has launched infringement proceedings against France challenging this tax and its compatibility with EU law. The proceedings are likely to take some time, but in order to preserve the right to make a refund claim for the years 2013 and 2014, it will be important to lodge any claims with the French tax authorities before 31 December 2015 (without waiting for the European Court’s decision).