Tax Disputes & Investigations
Employer Specialist Services National Minimum Wage
National Minimum Wage (NMW)All employees have a legal right to be paid the National Minimum Wage (NMW). This sounds very straightforward, but many employers encounter problems when trying to apply and/or comply with the law. The construction and hospitality industries often fall foul of the NMW regulations, primarily because employees in these sectors do not typically work set or standard hours. Shift workers can work different hours each day or week and it can be difficult, expensive and onerous to maintain daily records of hours actually worked. Arrangements for time off in lieu are often agreed informally or verbally rather than written down - and employers often forget (or don't know) that any time off in lieu must be taken in the same pay period to qualify. Any business can be the subject of a NMW Compliance Review by HM Revenue & Customs (HMRC). These reviews are often carried out after a complaint from a worker (or ex-worker), but this is often not disclosed to the business. Some complaints are genuine, but a number are either incorrect or driven by malice. Many businesses are unaware of their NMW record keeping requirements or that the burden of proof lies with them to disprove any claims made. The law states that any employer who is subject to a complaint must disprove that claim. If not, HMRC will accept that NMW has not been paid. An Underpayment Notice is then issued requiring the employer to pay the employee any shortfall (calculated at current NMW rates). This will, of course, be subject to employer NIC, but there is also an automatic penalty of 50% of the arrears due (reduced to 25% if the worker (or ex-worker) is paid within 14 days). From 1 January 2011 onwards, employers who are deemed to have failed to pay their employees the National Minimum Wage can also be publicly "named and shamed" by HMRC. This could cause significant reputational damage both locally and nationally. To be "named and shamed" a business must have underpaid its workers by at least £2,000 with the average underpayment per worker being at least £500. The costs of an adverse finding by HMRC can be serious. If the employee claims to have worked just 5 more hours each week without pay, then the employer could face costs exceeding £2,600 for each year of employment. How can OneE TDI help? At the core of OneE TDI is a highly experienced team specialising in all areas of tax disputes and investigations work. We offer confidential, non-judgemental advice to best defend our clients and have a proven track record in successfully managing all contentious tax matters. We have assisted employers to establish and maintain robust systems to comply with NMW legislation and successfully defended numerous businesses from claims made by current or former employees and have also ensured that any enquiry or dispute with HMRC was resolved quickly, fairly and with little disruption to the business itself. We provide a comprehensive service to accountancy and legal practitioners and their clients. Our advice saves our clients time and money and helps reduce their potential exposure to tax, interest and penalties. Whilst we endeavour to provide informative and accurate information, the content on this site is for general information purposes only and should not be taken to constitute tax or legal advice which must always be tailored to individual circumstances. Please contact us if you would like to discuss matters. [Top] |
