The British Business Law

Like many other nations, the UK has several administrative hassles and regulatory requirements that must be met while conducting business. Prior to launching their own business in the UK, prospective entrepreneurs must first decide on their organization's structure and legal form. Such a form establishes the fundamental rights and obligations of both the company itself and its founders in accordance with the rules of the law. The service sector is the dominant one in the British economy's structure. Financial and business services hold the top spot in it, determining the nation's specialization in the system of international economic interactions. Another most important sector of the British economy is industrial manufacturing. Thus, the choice of spheres of activity is quite great. Additionally, there are five main legal forms of organizations.

Five Main Legal Forms of Organizations

 Sole Trader is the easiest way to start and run a business. It implies ownership and full control over the business belong to one person (BIS, 2). Business in the form of an individual entrepreneur can be associated with a high risk, since personal property is not separated from business and an entrepreneur is fully responsible for all of his property for his or her business, his or her debts and obligations under contracts and other issues. Unincorporated Associations are associations of several participants who have drawn up an agreement and signed a joint activity agreement specifying the purpose and subject of the activity (BIS, 2). Such associations usually have a charter, which sets out the goals of its creation and establishes rules for both the organization itself and its members.

Partnership is a relatively simple way to start and run a joint business in order to generate profit for two or more business partners (BIS, 2). Partnership can be formed without drawing up a formal agreement, when its participants jointly conduct business operations. However, usually, an agreement is concluded on the purposes and subject of the activity within the partnership. Partners, as a rule, form a legally binding agreement on cooperation, which specifies such issues as the amount of capital contributed by each participant and the rules for distributing the profits or incurred losses.

Limited partnership implies the presence of two classes of partners, such as simple and limited partners (BIS, 3). This form is similar to a partnership, but the main difference is that special partners cannot participate in business management and their liability is limited to the amount they invested in the charter capital of the partnership. Trust is an unincorporated organizational and legal form that does not have an independent legal entity (BIS, 3). In essence, trust is a legal mechanism used by entrepreneurs to own assets with the condition of separation of ownership and economic interest. This form holds assets on behalf of an individual or other organization, and determines which way they should be used.

Section 1: Nature of Legal Systems

The Legal System of England is included in the Anglo-Saxon Legal System, the main source of which is the rule formulated and expressed in judicial precedents, that is, in judicial decisions on a particular case, which are then given binding force. Additionally, the statutory law of parliamentary origin is also a source of law. In English Law there is no division into public and private ones. There are also no European codes in England. The branches of English law are less pronounced than in the continental legal systems, and the problems of their classification in practice and in scientific doctrines are paid much less attention. The matter is that courts in England have general jurisdiction and consider different categories of cases, such as civil and commercial ones, for instance.

When reviewing cases, English judges usually have to find out if any similar case was considered earlier, and in the case of a positive response, they are guided by an existing pattern of actions. The degree of mandatory precedent depends on the place in the judicial hierarchy of the court considering the case, and the court, whose decision can become a precedent. The Court of Appeal that consists of civil and criminal branches is obliged to comply with the precedents of the House of Lords and its own, and its decisions are binding on all lower courts (Marson & Ferris, 63). The High Court is bound by the precedents of both higher instances. Its decisions are binding on all lower courts, and also affect the consideration of cases in the branches of the High Court, although they are not strictly binding on them.

In the area of tariff regulation of imports, the basic document is the Integrated Tariff of the United Kingdom, which includes the Common Customs Tariff of the European Union, the system of statistical nomenclature, as well as the system of harmonized description and coding of goods developed within the framework of the Council for Customs Cooperation. In England, a range of goods, customs duties and procedures are used, similar to those adopted in EU member countries.

The Queen has broad and important powers that were previously concentrated in the hands of one person, and are now distributed between the Cabinet and other structures that are controlled by him. Powers are divided into two categories, power based on tradition and prerogative, and power based on the law and decisions of parliament. If in the second case there is almost never any disagreement, in the first it is very difficult to determine the limits of the monarch’s abilities. On the other hand, considering them as given, the constitutionality of the British monarchy is expressed in the fact that royal prerogatives are applied on the advice of ministers. For their implementation, parliamentary approval is not required. Moreover, before the next meeting of the parliament will discuss a bill that in some way can affect royal interests or prerogatives, it is necessary to obtain the monarch’s consent in advance. It is also important that prerogatives have a number of limitations: one of them is that the monarch cannot introduce new taxes.

In legal and judicial matters, monarch also does not play a special role, not counting the fact that he or she heads all the judges of the Kingdom, and has the royal right of pardon. The present executive body of Great Britain is the Cabinet of Ministers. It carries out the action of all bills and bringing them to life, it also keeps track of all organizations on behalf of the crown. Even in the sphere of international relations, the Cabinet does not allow the monarch to be more than just an agent of the Cabinet of Ministers, which is responsible for the work of the Kingdom authorities in all spheres. All that can direct the monarch in this case is to be informed about the existing situation inside the country and in the world, and also have the opportunity to discuss this with his ministers.

Section 2: Impact of the Law on Business Organizations

In the UK there are certain rules and requirements that must be followed when organizing a business to avoid problems. It is very important to get professional advice on such points, as tax legislation, intellectual property, labor law and insurance (“BPP Learning Media”). Tax legislation means that an accountant must be employed to help entrepreneurs understand the tax issues applicable to their types of businesses and the system of payment. As for intellectual property, there must be a layer in a company that would deal with relevant laws and regulations to avoid potential problems and litigation. Following labor law is especially important to comply with these laws; the deviation may threaten you with serious consequences for you and your business. Registration of insurance in some cases is a legal obligation. It would help to protect an entrepreneur and his or her business from potential problems. There are several types of insurance, it is important to choose the ones that are required for a business.

English tax system consists of nationwide and local taxes (James, 10). State taxes include income tax for individuals, corporate income tax, capital gains tax, oil income tax, and inheritance tax, value added tax, duties and excises, and stamp duties. State taxes in England represent over 90% of tax revenues to the state budget. Local taxes only belong to the property tax, part of which is about 10% of tax revenues. Any profit that was received in England is taxed regardless of the residence or formal residence of the person or country of incorporation of the company. In the case of private individuals, this can be understood in this way. Persons who are not tax residents, one should pay tax only on profits earned. The revenues received outside the country are not taxed.

Any resident of England for tax purposes is a company registered in the country or a central office and is controlled there (Tiley & Loutzenhiser, 110). English non-resident company that trades in the country through a permanent establishment is liable for corporate tax on all revenues associated with this permanent establishment. The corporate tax rate is set separately for each financial year beginning April 1. If the reporting period of the company does not coincide with the financial year, its profit should be distributed over time, and accordingly the corporate tax rate is applied.

VAT is charged on the supply of most goods and services provided by companies in England. This tax is levied at every stage of the supply chain, usually when the ownership of goods passes or when services are performed. Registration as a VAT payer is compulsory for English companies whose turnover exceeds the established threshold of £85,000. Voluntary registration is also possible when the turnover does not exceed the established threshold. There are no VAT registration thresholds for companies that provide taxable goods and services to England, which do not have a business address in the country. Such companies must register for VAT immediately after the taxation of supplies, unless the reverse charge mechanism is applied.

The tax on additional security, payments and benefits on the part of the employer in the interests of the employee is not levied. Transfer pricing legislation details the procedure for conducting transactions between related persons, based on the internationally recognized principle of outstretched hand. For tax purposes, such transactions are considered taking into account the profit that would arise if the transactions were carried out by independent parties under comparable conditions. English transfer pricing legislation also applies to transactions between any related entities in England. Most small and medium-sized companies are exempt from the application of transfer pricing rules. Small companies that have no more than 50 employees and an annual turnover or a balance sheet of less than 10 million euro are considered small. Companies that have no more than 250 employees and an annual turnover of less than 50 million euro or a balance total of less than 43 million euro are considered medium-sized companies.

The CFC rules are provisions aimed at combating tax evasion aimed at preventing the diversion of profits from England to low-tax areas. If the profits bypass the CFC rules, it is distributed and levied by an English corporate shareholder that has a share of at least 25% in a foreign controlled company. In general, CFC profit will be taxed using the usual corporate tax rates and rules for persons controlling CFC if the profit passes through the CFC gateway and is not an exception.

All employed people in England have the right to a state minimum wage, for working hours, for health and work; also the right to join associations; protection from unfair discrimination (“Employment Status”). Also, workers over 22 years of age should receive a minimum pay of 5.73 pounds per hour. Employees from 18 to 21 years old must receive a minimum pay of 4.77 pounds per hour. Workers from 16 to 17 years should receive a minimum pay of 3.53 pounds per hour. However, there is also a residue problem. Deductions from wages for goods and services provided. An employer should not reduce your salary below the minimum. Legislation does not provide for fixed hours: Some people are paid for the amount of work done work, not for how long they work.

Each employee is entitled to a 20-minute rest break, if the duration his or her work day exceeds six hours. Regarding vacation leave, each employee is entitled to 28 days of paid annual leave. Any employer must provide his employee with a working environment that guarantees the protection of health and safety of work. It includes training in safety at work. There are many special rules that should be followed at each workplace, where there are special risks for employees. Additionally, everyone has equal rights in terms of age, sex, race, disability, pregnancy, sexual orientation, religion or beliefs.

Case Study 1. The 16-year-old girl is very sorry, because she was not lucky and the responsible person was not there at the right time. The term of work accident means that in the performance of work duties, the physical or mental health of the employee has been harmed. In England, there is the law on the prevention of accidents at work. According to him, any employer must take care of the health of his employees. In accordance with the norms of the law, the employer must monitor the level of noise, gas contamination and dust, and provide workers with protective clothing, footwear, eye protection and so on. Additionally, for minors, and also for trainees, management should be monitored and monitored. They must report illnesses and incidents to the responsible institutions, and record them in the book of incidents.

Management is required to conduct briefings related to the activities of employees. As for workers, they need to fully cooperate with the employer. If a safety violation has been detected or the equipment needs to be repaired, it should be reported as soon as possible so that the employer can take appropriate measures. Thus, an employee will have confirmation that he tried to prevent the accident and informed the head of this. In the case of a 16-year-old girl, the first thing to do is tell the supervisor and make sure that the case was recorded in the Accident Book. If the employer does not have such a book, all the details of the incident should be recorded and transferred to the employer so that he retains the copy.

The next step is to consult a doctor. If an ambulance was not called at the scene of an accident, since the incident was not too serious, you should immediately contact the family doctor or the Accident and Emergency Unit. In addition to examining and prescribing appropriate medications, the doctor will record the fact in the medical history. It is an important point, as the employer will have to refund the treatment to the girl. In the future, she will have to apply to the Department for Work and Pension for the manual (“Employment Maintenance: Jobseeker’s Allowance: Joint Claims to Jobseeker’s Allowance”). Additionally, a minor girl is laid on a sick-list Statutory Sick Pay. Due to burns she will not be able to work for a while. Therefore, it may need Industrial Injuries Disablement Benefit. She also has the right to demand compensation for harm to health from the employer.

Section 3: Legal Solutions to Business Problems

Case Study 1. If there is a possibility to check the CCTV cameras, then it is worth checking the video recordings. If it is not possible, then Calvin must prepare a lawsuit. The Defamation Act of 2013 was approved by the Queen in 2013. Section 2 of this law introduced a new defense method for a defendant that does not allow to be held accountable if the claim contained in the claim contains a judgment that is substantially true. In addition, section 2 includes one of the long-standing norms of common law. It is inadmissible to use the argument that the defendant only repeated the words of other persons as defenses against accusations of defamation. In this case, if the impugned statement contains several judgments, and some of them are not considered to be substantially true, the defendant does not lose the right to defense under section 2 of the law of the Defamation Act 2013, if such judgments do not cause serious damage to the plaintiff's reputation.

UK law in the field of labor relations gives the employer the right to dismiss an employee in the event that the position he replaces is declared uncalled for in his activities. The order of redundancy reduction and its terms are established by the Labor Rights Act of 1996, the Employment Rights Act of 1996 (“Employment Rights Act 1996”). The Law on Labor Rights provides for cases when the employer makes a decision to reduce redundancy workers due to a production need or by agreement with them. In each of these cases, the employer must fairly choose the workers to be reduced and not allow discrimination on any grounds. With the reduction by agreement, the employer appeals to his employees in search of persons wishing to put forward their candidacies for reduction or early retirement in exchange for mutual satisfaction. The proposal for early retirement should apply to all employees, that is, its sending to individual workers is not allowed.

Case Study 2. Any entrepreneur always has an additional responsibility for paying taxes and other mandatory contributions for his employees, as well as for employers’ liability insurance. Insurance for business is very important, however, nevertheless, even in a highly developed state, controversial situations occur. The presence of insurance, for example, would save the entrepreneur from risks that pose a potential threat to business. The fire was such a risk, which physically destroyed the store. The activity of insurance companies in England is regulated by the relevant legislation. Insurance activities in the UK are regulated by the Insurance Companies Act of 1982. The law regulates the insurance activity of companies in the form of joint-stock companies. In this case, if the insurance company refuses to compensate for the financial losses after a fire.

In this case, file a lawsuit in court, will be accounted for by the Financial Services Act of 1986. This law regulates investment activities in England, including life insurance and pension insurance (“Financial Services Act 1986”). Written claim is the first option, which can be used before filing a claim in court. The claim must be submitted in writing, be sure to fix the date of transfer of the claim. The letter itself should contain the essence of the claim, as well as a description of the situation that has developed (in this case, the refusal to pay). The company will have 30 days to respond, and if there is no answer, the court is the next step. During the trial, using the above laws, the court obliges the insurance company to either pay at least part of the amount, or Kevin and his father lose the court.

Section 4: Recommending Appropriate Legal Solutions Based upon Alternative Legal Advice

Case Study 1. The presence of protracted conflict situations in the relationships of business partners is a consequence of poorly-managed corporate governance. Each of the partners in the business, of course, pursues its goals, but, nevertheless, all possible disagreements must be foreseen and warned. And even if such agreements were not fixed in the documentation, in the event of friction it is important to use all the ways to reach an agreement.

Given the specificity of this situation, the first thing to do to resolve the situation is negotiations and adaptation to changes in the business environment. This adaptation always occurs with an eye on a number of subjective factors, one of which is the coordination of interests. It is beneficial for these two entrepreneurs to cooperate, as was said earlier. The need for reconciling interests is closely related to business management issues. Without coordinating the interests of everyone, their further successful coexistence is impossible. In fact, the introduction of corporate governance allows you to coordinate interests not only at the level of the owner’s relationship with another owner.

It is difficult to make concerted decisions when one of the partners strives to maximize today's profit at any cost, while the second is aimed at forming long-term values, completely ignoring the current needs of the business. Conflicts of values undermine trust between partners, without which joint business management is ineffective. If these partners differ in understanding the objectives of the activity, they cannot agree on the key principles of coexistence, it is unlikely that they will be able to achieve long-term cooperation. The way out of conflict of values, as a rule, is possible only through the termination of partnership.

Settlement of conflicts of interest can be problematic, since the changed situation may not be obvious, and the recognition of the changes that have occurred is painful. The resolution of such conflicts is possible if the partners have a common system of values and the desire to eliminate contradictions. When deciding the most beneficial for the business, one of the partners most likely will have to put aside personal interests and ambitions, take control of your own ego. It is not so easy to agree that your partner, not you, is a more talented leader, deserves greater authority or higher pay.

Works Cited

BIS (Department for Business, Innovation & Skills). Guide to Legal Forms, 2011. www.gov.uk/government/uploads/system/uploads/attachment_data/file/31676/11-1399-guide-legal-forms-for-business.pdf. Accessed on 29 December, 2017.

BPP Learning Media, Business Law: Course Book, London: BPP Learning Media, 2013.

“Employment Maintenance: Jobseeker’s Allowance: Joint Claims to Jobseeker’s Allowance”. Gov.UK. www.gov.uk/hmrc-internal-manuals/paye-manual/paye67025. Accessed on 29 December, 2017.

“Employment Rights Act 1996”. Legislation.Gov. UK. www.legislation.gov.uk/ukpga/1996/18/contents. Accessed on 29 December, 2017.

“Employment Status”. Gov. UK. www.gov.uk/employment-status/employee. Accessed on 29 December, 2017.

“Financial Services Act 1986”. Legislation. Gov. UK. www.legislation.gov.uk/ukpga/1986/60/pdfs/ukpga_19860060_en.pdf. Accessed on 29 December, 2017.

James, M. Taxation of Small Businesses. London: Spiramus Press, 2015.

Marson, James & Ferris, Katy. Business Law. Oxford University Press, 4th Edition, 2015.

Tiley, John & Loutzenhiser, Glen. Advanced Topics in Revenue Law: Corporation Tax; International and European Tax; Savings; Charities. Hart Publishing, 2013.