How to Stay Safe from HMRC
If you like this video and want to keep abreast of the latest employment tax news please subscribe to our YouTube channel.
One of the major current risks for employers is to ensure that the complex requirements of National Living and Minimum Wage Regulations (NLW/NMW) are met.
Active policing of employer NLW/NMW obligations is undertaken by HMRC, and we are aware that the department has recently increased its resources dedicated to this task, by a substantial number.
In truth very few employers set out with the intention to pay below Minimum Wage. However the rules can be very complicated, with much of the official guidance being patchy to say the least. Furthermore HMRC permits very little discretion and seeks to apply the rules rigidly.
Whereas most tax investigations are settled on a ‘handshake’ and are kept confidential, HM government is permitted to name publicly any employer who has underpaid Minimum Wage by more than £100 in total.
Of course this process works disproportionately against larger employers or those with significant numbers of workers paid close to the lower levels (e.g. those in the retail or catering sectors). For example a major high street retailer was reported at the top of one recent published list, despite its average underpayment only being around £11 per employee.
Whilst we cannot prevent HMRC from coming to visit you, a little advance preparation can go a very long way. Often small changes to contracts or staff policies can have a fundamental effect on any future potential issue. Whilst we have noted HMRC’s enforcement processes to be somewhat ‘determined’, it is important to recognise that many statements made by the department reflect a ‘view’ of legislation rather than the point having been established firmly by case law.
If you think we may be able to assist either in dealing with a current review by HMRC or in seeking to prevent issues from arising in the future, please do not hesitate to contact us below.
Get in touch.