HMRC Investigations: 5 things employers should know

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HMRC Investigations: 5 things employers should know

29 Jun 2017

The spotlight for HMRC investigations into breach of the National Minimum Wage Regulations has traditionally fallen on employers in the care, retail and hospitality sectors. Increasingly, we are seeing that HMRC is starting to widen the net to other sectors such as sports and manufacturing.

Mark McKeating, a solicitor from our Employment team sets out 5 things that employers ought to know about HMRC investigations:

1. Employers are getting it wrong when it comes to three areas in particular:

  • by incorrectly relying on payments relating to uniforms, tips, gratuities or service charges to offset payment of the minimum wage rates;
  • operating an annualised hours system and asking their hourly paid staff to down tools during quieter periods; and
  • using ‘apprentices’ to carry out full work that is not linked to their training.

2. Get it wrong and it’s costly; Employers risk a fine of up to £20,000 per worker in addition to any underpayment. HMRC are pursuing notice of underpayments for any wage arrears in excess of £100.

3. The Department of Business, Energy and Industrial Strategy (BEIS) will name and shame you. HMRC claim that this is to raise awareness publicly about the importance of compliance with the Regulations. BEIS have recently ‘outed’ offenders such as Monsoon Accessorise, H & M, MacDonalds Hotels and over 70 care homes. The ‘naming scheme’ will apply to any employer investigated by HMRC and issued with a notice of underpayment.

4. It’s a criminal offence; Employers can be prosecuted, amongst other things, if they refuse or wilfully neglect to pay National Minimum Wage. It is also an offence to delay or obstruct a compliance officer from carrying out their investigations.

5. Take action; It may be that you need to review your working practices to ensure that they are compliant with the Regulations. If you are issued with a notice of underpayment, you are entitled to appeal to an Employment Tribunal to avoid your inclusion on the naming scheme. In our experience, employers can also negotiate settlements with HMRC but any success is best achieved by employers taking pre-emptive steps before any formal investigation takes place. All calls will remain confidential due to the principle of legal privilege.

If your business is subject to an HMRC investigation or you are concerned that your practices are not compliant with the Regulations then please call us confidentially on 0161 832 3434 to speak to a member of our employment.

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