HMRC continues focus on National Minimum Wage compliance
HMRC continues to focus on National Minimum Wage (NMW) compliance and enforcement activity, with employers in North and East London the latest to be under the spotlight.
This forms part of a wider UK strategy to encourage adherence through:
- Education of agents, employers and workers
- Issuing penalties
- Naming and shaming non-compliant employers
- Requiring back-pay for affected workers
One to Many letters: HMRC contacts London employers
As part of its on-going geographical compliance approach, HMRC has launched a targeted initiative in North and East London. This includes sending One to Many (OtM) letters to selected employers in the region.
We are aware that some clients have already received these letters. If you have, we recommend speaking to one of our Employer Solutions specialists for tailored support.
The letters highlight that there are “lots of ways in which workers can be underpaid” and that “mistakes are easy to make”. In our experience, many of the employers who have been named and shamed in the past have underpaid NMW due to insufficient understanding or incorrect application of the legislation, rather than any intention to underpay their workers.
The NMW OtM letters:
- Include a checklist to help identify common areas of risk
- Encourage employers to review procedures and correct any future underpayments and address past underpayments
- Warn that HMRC are carrying out compliance visits in the area
Any underpayments identified from a pro-active review should be appropriately addressed, and the advantages of doing so are that if the past is fully corrected prior to an HMRC visit, this should mitigate the reputational risk of being named and shamed and penalties being levied.
Regional focus: who’s already been targeted?
HMRC has previously run targeted NMW campaigns in various UK regions, including:
HMRC is using data and regional profiling to focus compliance efforts in areas where risk is considered higher, often due to sector profile or complaint volumes.
A timely reminder for all UK employers
Although current activity seems to be focused on North East London, this serves as a timely reminder for all UK employers. The margin for error on NMW is narrow, and even well-intentioned employers can unknowingly breach the rules.
Common issues include:
- Unpaid working time (e.g. pre-shift briefings, travel, or training)
- Deductions for uniforms, tools, or training
- Salary sacrifice or benefits reducing pay below the legal minimum
- Misclassification of workers, such as apprentices or interns
HMRC continues to take a data-driven approach, using payroll, tax, and benefits data to flag risk.
Don’t wait for a knock on the door
The financial and reputational risks of non-compliance can be significant. Even if you haven’t been contacted by HMRC, a proactive review of your NMW compliance is strongly recommended.
We’re here to help
Our Employment Tax specialists support businesses across the UK to review and strengthen NMW processes, helping you reduce risk and ensure ongoing compliance.
If you’ve received a letter from HMRC, or simply want to be confident in your position, please contact your usual Azets adviser or a member of our Employment Tax team.
