In an effort to ensure that no employee is underpaid, HMRC has ramped up its enforcement actions against non-compliance with the National Minimum Wage. This scrutiny comes on the heels of an increase in HMRC’s enforcement budget ...
Scrutiny from HMRC continues to intensify so businesses must adapt to these pressing demands to avoid conflict with the law!
The Department for Business and Trade (DBT) has released compelling statistics highlighting HMRC's growing activity, specifically in the 2022/23 tax year. The report reveals a notable uptick in cases closed, revealing £13.66 million in arrears. This affects many thousands of workers.
Of particular concern is the new 'Geographical Compliance Approach' that HMRC has recently implemented, fostering a structured seven-step protocol intended to guide employers in adhering to NMW requirements effectively.
This GCA provides a framework that employs three distinct tiers:
Initially, HMRC engages with businesses to encourage compliance
Subsequently, it delves into more formal enforcement actions if shortcomings persist
The final phase of this enforcement structure includes severe consequences: employers face 200% penalties on identified arrears, and their names are made public, tarnishing their reputational standing
Whistleblowing culture is strongly encouraged among workers, as HMRC's data indicates a growing number of cases initiated through employee complaints. This year, HMRC has expanded the number of targeted locations for enforcement, with businesses in London being advised to meticulously review their payroll records.
Specific focus areas include any deductions from pay that might affect NMW calculations, unpaid working time, and ensuring that apprenticeship agreements align with the new age-specific NMW brackets established in April 2024.
The implications of failing to comply are significant. Over 90,000 investigations have been conducted since 1999, resulting in 1.5 million workers receiving their rightful NMW arrears. With 17,600 compliance letters dispatched to employers in Belfast, Cornwall, and Watford alone during 2022/23, the implications of complying with labour laws have never been more evident.
Beyond just financial penalties, employers must also bear in mind the additional burden of National Insurance employer contributions and potential pension contributions resulting from NMW arrears. As HMRC intensifies its monitoring of compliance and encourages transparency, businesses are urged to adopt proactive measures to ensure that they uphold their legal responsibilities.
In this evolving regulatory landscape, staying informed and compliant is not just beneficial, but essential for sustaining a positive business reputation!
Ultimately, with the recent announcements from HMRC, the clarion call to employers is clear: prioritising compliance will safeguard against unwelcome financial repercussions and preserve their standing in a competitive market.
As scrutiny from HMRC continues to intensify, businesses must adapt and respond to these pressing demands to avoid conflict with the law.
Until next time ...
ROGER EDDOWES Business Godparent
Would you like to know more?
If anything I've written in this blog post resonates with you and you'd like to discover more about this increase in HMRC scrutiny to ensure compliance with the National Minimum Wage, it could be a great idea to call me on 01908 774320 and let's see how I can help.
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Roger trained at Edward Thomas Peirson & Sons in Market Harborough before working at Hartwell & Co, followed by Chancery, as a partner. He started Essendon Accounts and Tax with Helen Beaumont in 2014 as a general practitioner with a hands-on approach.
Roger loves getting his hands dirty, working with emerging, small-to-medium and family businesses to ensure they receive the best possible accountancy advice. Roger utilises an extensive network of business contacts to leverage the best guidance and practical solutions.
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