HMRC Minimum Wage Audit - a client's experience

I wanted to share the recent experience of a client, who was subject to a lengthy audit on the minimum wage. This apparently was a random check, not the result of a complaint. 

The client in question is a principled employer and has never intentionally paid under the minimum wage. However being in the hospitality industry they employ many young people. As a result of this, birthdays happen and sometimes, inadvertently, small payroll errors can occur when someone enters a new pay band due to age. These were always rectified as soon as they were discovered. 

This audit resulted in a great many requests for information from HMRC, for specific pay periods for specific individuals. Many of these went back to previous years. HMRC also wanted to speak personally to a number of employees. Once these questions were answered, HMRC came back repeatedly with more enquiries. 

My client had nothing whatsoever to hide, but despite this they did come under a fairly sustained interrogation. In terms of person hours, it was a very time-consuming and stressful exercise, with a definite real-terms financial impact. 

In the end, in frustration and with my help, the client asked HMRC a number of fairly pointed questions, and then (coincidentally or otherwise), the audit was concluded, with no penalties. 

So what’s the take-home from this? 

First, do monitor staff birthdays as they relate to minimum wage and make good any accidental errors straight away. 

If you are audited, do co-operate but if you feel they are not being entirely reasonable, do contact me and I’ll help draft a similar email to the one I recently did. 

Remember also that furloughed staff (on 80% of pay) can legitimately be paid under the minimum wage because it’s not pay for work.