Retailers urge HMRC to reconsider National Minimum Wage enforcement rules

Retailers have called on HM Revenues and Customs (HMRC) to halt enforcement against employers that have breached national minimum wage (NMW) rules, claiming that the current system is “no longer fit for purpose”. 

The British Retail Consortium (BRC) has asked for casesinvolving the use of salary sacrifice schemes to be shelveduntil the government has concluded its current consultation on their use.

The BRC said that current regulations, which are now two decades old, no longer reflected the flexibility offered by the retail sector. It added that the tax authority “too often” targetsemployers that inadvertently violated rules despite them seeking to comply.

Many retailers believe they have inadvertently fallen foul of NMW regulations. HMRC has stepped up its enforcement regime in recent years and has successfully fined hundreds of employers and have accused many of them of deliberate underpayment. But many have also been punished for deductions for uniforms or confusion over processing tips, with businesses claiming that regulations are unclear or inconsistent.

The retailer Iceland could be facing a bill of £21m in underpaid wages because it may have broken NNW regulations through a voluntary salary sacrifice scheme – designed to help employees save for Christmas – which may have pushed employees’ pay below minimum wage levels. 

Its Chief Executive said that the investigation was ludicrous and massively time-wasting” as the business was actually trying to do the right thing and give a helping hand to its staffby providing them with an opportunity to save.

In the letter to HMRC, the chief executive of the BRC, welcomed the government’s consultation on NMW rules, but said that pausing enforcement activity would enable HMRC to “reset” its relationship with business ahead of April’s rise in the minimum wage. 

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