Are you meeting HMRC’s requirements?

HMRC is responsible for ensuring that employers correctly apply the NMW/NLW and they have invested heavily into compliance teams who police the system.

HMRC target employers for inspections based on a number of factors, including projects in specifi c sectors, but the most common triggers are the calls that they receive via the Employee Hot Line. The Hot Line is freely available to all and the majority of the inspections are initiated by calls from ex-employees, or current employees, claiming that they have been paid below NMW/NLW.

HMRC are required to follow up every call received and, typically this results in a NMW Compliance Inspection for the employer.

What is the impact of a NMW/NLW Inspection?

Once an inspection has started, even if ultimately no issues are identified, if not managed correctly, the process can be very intrusive and time consuming for the employer. The inspection will cover the whole workforce, not just the complainant, and HMRC will not reveal who the complainant is or the nature of the complaint. If an error is discovered, the employer is required to make payment to the affected employees, using the NMW/NLW rate current at the time of the settlement rather than the rate applicable at the time of the initial underpayment. HMRC also recover a penalty of up to 200% of the underpayment. The minimum penalty is 100% of the underpayment.

In addition, every three months, HMRC ‘name and shame’ offenders by publishing a list of all, even relatively small, settlements.

If you have any queries regarding NMW/NLW inspections, please get in touch.

For further information about our upcoming employment tax seminars and to secure your space, click here.

View flyer