Fines for underpayment of apprenticeship levy have doubled in the last year

The number of organisations being investigated for underpayment of the apprenticeship levy has more than doubled in a year, according to new research which demonstrates complexities in administering the scheme.

Her Majesty’s Revenue and Customs (HMRC) has launched 84 separate investigations in 2018/19, up from 33 the year before. HMRC said businesses collectively underpaid £13.6m in levy funds in 2017/18. Under the apprenticeship levy, businesses with an annual payroll of more than £3m must pay 0.5 per cent of their total wage bill – minus a £15,000 allowance – into a pool which they can then draw on to fund approved training schemes.

A growing number of employers found the levy complex and difficult to comply with, which led them to inadvertently underpay and left them exposed to potential fines. The high number of investigations HMRC is launching into underpayment is a symptom of the wider problems that are hampering the scheme’s effectiveness.

Online calculator tools are available for employers to identify how much levy they needed to pay, but like other HMRC calculators, it has been criticised as being overly complex and clunky.

Many businesses still see the apprenticeship levy as an employment tax and the research found that one in seven firms simply wrote the levy off as a tax, due to their struggles putting the funds into action.

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