HMRC compliance checks on National Minimum Wage

2 Jul 2019

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Saffery Champness is reporting feedback from clients suggesting that HM Revenue & Customs (HMRC) is once again particularly active with targeted National Minimum Wage (NMW) checks.

In addition to having to pay the arrears, employers can face a 200% non-negotiable penalty on underpayments, going back up to six years, for current and ex-employees. Where the arrears total more than just £100, the employer will also be publicly named. The penalty is reduced by 50% where paid within 14 days.

The main NMW breaches made by employers relate to:

  • Provision of benefits such as accommodation. Where rent-free accommodation is provided, the ‘accommodation offset’ is added to pay for NMW purposes, but any rent paid by the employee should be deducted.
  • Incorrect deductions from pay for own goods, products and food or salary sacrifice.
  • Deducting the cost of a uniform or equipment required to carry out a role, where these are not provided by the employer.
  • Volunteers. HMRC is challenging whether individuals are truly volunteers or actually workers for NMW purposes. Any such arrangement needs to be very carefully worded.

Martyn Dobinson, a partner and a member of Saffery Champness’ Land & Rural Group, comments:

“We are aware that HMRC is continuing to carry out compliance checks across the rural sector to see that National Minimum Wage levels are being met and the correct allowances and deductions being made.

“Penalties for non-compliance are severe and we are urging all employers to be aware, not just of the correct National Minimum Wage levels, but also to be sure that their records are correct and up to date. In the rural sector, there can be additional complications with casual workers and temporary staff – beaters employed on shoots, or seasonal agricultural workers, for example. Where there is any doubt then professional advice should be sought.”