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Markel Tax

23 May 2018

HMRC tackling National Minimum Wage

In light of the scrutiny placed on worker status and the governments consultation on self-employed status, it is probably no surprise to see HMRC appear to have a renewed interest in the policing of National Minimum Wage (NMW).

One of the complications of NMW is that while it doesn’t apply to self-employed individuals, it does apply to employees and workers. As HMRC guidance itself acknowledges, the definition of a worker is much wider than that of an employee and it is therefore possible that some engagers may have a workforce who are not employed but may, inadvertently, fall within the definition of “worker”. 

The issue of worker status is complex, and fraught with pitfalls for engagers of self-employed subcontractors (and we have provided much commentary on these issues previously). For engagers and their advisers, it is not just the complexities of determining whether an individual is a worker for NMW purposes that can cause problems, HMRC enquiries under NMW do not follow the normal process of a status enquiry.

Under a traditional status enquiry, it is for HMRC to carry out fact-finding and apply those facts to case law to form an opinion on the status of the individuals engaged. The burden of proof is in the taxpayer’s favour, as it is down to HMRC to effectively make their case. Under a NMW enquiry, the burden of proof on the engager, by virtue of the legislation, is shifted and it is for the engager to demonstrate individuals are not subject to NMW.

In addition, the manner in which NMW is investigated by HMRC and the powers which are at HMRC’s disposable are notably different. The legislation provides statutory definitions and sanctions (it is not reliant solely on case law), and HMRC guidance itself explains that a NMW investigation will scrutinise advertising, rates, implied conditions and third parties.

Markel Tax has been involved in NMW enquiries and investigations for over 10 years and can provide advice and representation to companies, or advisers, who are subject to an existing enquiry or who want to futureproof their position.

In addition, we are currently running a discounted promotion for our clients offering a second opinion on any current HMRC enquiry into self-employed status, IR35, CIS, umbrella companies and NMW. We will provide a papers review of the current enquiry and provide our opinion of the strengths and weaknesses of the case for a fixed fee of £400 + VAT. 

For any further information, please contact us taxcontractorsolutionsuk@markel.com.
Tagged IR35
Next article in series

23 May 2018

Check of locums employment status letters

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