As well as sector-specific campaigns to tackle non-compliance with National Minimum Wage (NMW) regulations, HMRC has been running a geographical compliance campaign for the last year or so.
Belfast and Birmingham were the first targeted areas and it is understood the campaign is being extended to Glasgow next.
HMRC will be issuing letters to many employers across Greater Glasgow (and possibly extending to the Central Belt of Scotland) as well as individual employees, with the aim of:
Highlighting key risk areas
Inviting employers to address/disclose compliance failures
Inviting employees to lodge complaints (HMRC is obliged to act on all complaints received)
Avoid steep penalties for NMW breaches
Based on previous campaigns in Belfast and Birmingham, it is anticipated that this will result in a number of formal NMW audits being instigated by HMRC, the outcome of which will commonly be 200% penalties of any breaches identified (covering a six-year period) and the employer being publicly named and shamed.
To be clear, this campaign isn't necessarily aimed at employers deliberately paying below NMW rates, it is more around technical breaches of the law caused by employers not applying the nuances of the regulations correctly in areas such as pay deductions, staff costs (e.g. uniforms and tools), salary sacrifice, working time, worker category and age-related rates.
In our experience, HMRC is usually very successful in finding technical breaches of the law in all types of businesses, even where staff are paid well above NMW rates, sometimes significantly so.
Action needed to ensure compliance
It is important to ensure that you fully understand the NMW risks and compliance gaps in your business before an HMRC letter lands to provide an opportunity to self-correct any technical breaches before HMRC triggers a formal audit. Self-correcting mistakes in line with HMRC requirements can avoid financial penalties being applied and also being named and shamed in the press which is a significant and important incentive for any business.
It is highly likely this campaign will spread to other cities over the course of the next year or so, with Northern England possibly a key target area because of lower wages generally compared to more southern regions.
For more information about NMW regulations and support to ensure your business is compliant, contact our Employment Tax team, reach out to your normal Payroll contact, or contact our Head of Employment Tax, Brian Rudkin, directly at brian.rudkin@armstrongwatson.co.uk.
