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Small and medium-sized businesses (SMEs) in 11 UK regions are being targeted as part of an HMRC crackdown on perceived non-compliance with the National Minimum Wage (NMW).
Businesses in Belfast, Birmingham, Bradford, Cardiff, Cornwall, Cumbria, East Anglia, Glasgow, Liverpool, the North East and Watford are being checked by the tax authority and, if found guilty of non-compliance, will be required to pay NMW arrears to workers in addition to increased National Insurance Contributions.
Many of these businesses could be inadvertently breaking the rules due to their complexity and common misunderstanding around how to accurately calculate NMW beyond an hourly rate of pay.
HMRC has committed more than £27m to tackling NMW non-compliance, with regional enforcement being its main focus and targeting workers paid in excess of £30,000 per annum.
Areas are being targeted based on data suggesting a larger volume of workers potentially being paid below the required NMW rate, as well as intelligence gathered such as complaints made by workers in the region.
Kyle Newton, head of national minimum wage at Azets UK, said: “Maintaining compliance with National Minimum Wage is commonly misunderstood, with the calculation made up of several components across five core pillars – it is not just an hourly rate of pay.
“With HMRC continually ramping up enforcement and the Government granting the Low Pay Commission further powers to align NMW rates with real living costs, now more than ever there is a greater probability of business facing scrutiny. Employers should take proactive steps to ensure compliance before a letter lands on their desk.”
Targeted businesses will receive an HMRC nudge letter providing a list of common areas that can lead to NMW non-compliance. The next stage is a letter from HMRC offering to perform a free health check.
If a business does not accept HMRC’s offer of a health-check meeting, a formal enquiry will be opened with a risk of financial penalties up to 200% and public naming and shaming.
Newton added: “Effectively HMRC is flooding the postcode area, using a variety of methods to gather intelligence to aid its enforcement and collection of National Minimum Wage arrears and penalties.
“Additional tactics include targeting workers directly through a series of letters and social media campaigns encouraging them to check their pay and whistle blow if they believe they are paid below the required rate.”
