GLOBAL PAYROLL MAGAZINE
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Firstly I would suggest asking HMRC for an update meeting (with agenda) to ask for feedback on their findings around any NMW risks that they or the previous office have identified. HMRC are supposed to keep in regular contact with the business to keep them updated, however, I have heard of cases where there have been many months without any update. If and when a NMW risk is disclosed, you then have the opportunity to Challenge the risk – with counter- evidence to disprove its existence or Accept the risk but through
CCTV data or they may even conduct their own time and motion study to see how long certain tasks are taking. Remember NMW investigations can cover a total of a 6 year period, so gathering evidence for all employees and former employees over the previous 6 years can be a daunting and time-consuming task. I have been involved in many NMW investigations which have surpassed 4 or 5 years. That said, as your investigation has been ongoing for over 1 year I would have expected HMRC to have identified (and also ruled out) if any risks are at play here and be looking at ways to sample check if the risk/s actually led to any employee being underpaid. The change of compliance officer is frustrating, and many businesses have said that they feel when this happens the whole investigation seems to go back to square one. In my experience it will take a new compliance officer a few weeks to review all the previous notes and data gathered by the original investigator, however, it may be that there were gaps in the evidence which had not been correctly collected or reviewed leaving the new investigator to ensure all possible risks areas have been reviewed, evidenced and addressed correctly. After all, it is the responsibility of the compliance officer to satisfy themselves that the audit has been completed correctly, if arrears are identified and HMRC issues an enforcement notice which the business appeals, it will be the compliance officer who will have to present and defend their findings at any employment tribunal.
sampling you can demonstrate that the risk has not caused any employee to be underpaid.
If the sampling exercise identifies NMW underpayments, HMRC will usually ask the business to provide calculations for all employees across the previous 6-year period to show how much each employee has been underpaid (this will be calculated on a pay period basis). If the business is unable to undertake the calculations HMRC will ask for the relevant data and provide you with draft calculations for you to check and approve. Once the business has approved the draft calculations HMRC will issue an enforcement notice where the business will have a limited time to pay all the arrears to employees and former employees. They will also have to pay a penalty to HMRC (this is usually 200% of the arrears but can be reduced to 100% if all the arrears and penalty payments are made within 14 days).
So what can you do to facilitate the closure of your investigation?
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