Mark Pryce

Scotland’s largest city is one of the locations being specifically targeted by the tax authority, and businesses found guilty of non-compliance will be ordered to pay NMW arrears as well as increased national insurance contributions (NICs).

Businesses which do not accept HMRC’s initial offer of a health-check meeting also risk financial penalties of up to 200% and public naming and shaming.

Accountancy and advisory firm Azets UK, which specialises in the SME sector, warns that many businesses could be inadvertently breaking the rules due to their complexity and common misunderstandings around how to accurately calculate NMW.

Mark Pryce, head of corporate tax with Azets in Scotland, said: “The clampdown by HMRC on the national minimum wage will be of concern to many businesses across the Greater Glasgow area and beyond.

“Non-compliance is costly, time consuming and the reputational damage can be significant. Any employers concerned about the issue should seek advice as soon as possible.”

Kyle Newton, head of national minimum wage at Azets UK, said: “Maintaining compliance with national minimum wage is commonly misunderstood, with the calculation made up of several components across five core pillars – it is not just an hourly rate of pay.

“As an employer, unless you understand these pillars and have policies in place to govern and control each, you are at risk of non-compliance.

“From our experience, it is sometimes the case that enforcement is inconsistent with the circumstances of the targeted business, meaning that often HMRC calculations have applied incorrect assumptions.

“With HMRC continually ramping up enforcement and the government granting the Low Pay Commission further powers to align NMW rates with real living costs, now more than ever there is a greater probability of business facing scrutiny. Employers should take proactive steps to ensure compliance before a letter arrives.”

Mr Newton added: “Effectively HMRC is flooding the postcode area, using a variety of methods to gather intelligence to aid its enforcement and collection of National Minimum Wage arrears and penalties.

“Additional tactics include targeting workers directly through a series of letters and social media campaigns encouraging them to check their pay and whistle blow if they believe they are paid below the required rate.

“By taking proactive steps to ensure compliance and mitigate risk, businesses will avoid the 200% legal penalties, protect their reputation, and ensure fair treatment of their employees.”