Employers with lower-paid workforces (including workers near the minimum wage threshold), and those hiring in contract labour, need to be aware of two upcoming Government changes in April which raise new compliance and enforcement risks.
Firstly, the statutory minimum wage rates are increasing substantially in April, with the potential to pull new employers into the ambit of the complex regulations and HMRC enforcement action. In addition, existing minimum wage employers often assume that setting the correct minimum wage rate is enough, often overlooking how it is applied in practice and the risks of shortfall. Our experience is that accidental breaches in the way the rules are applied are increasingly resulting in significant and challenging HMRC enforcement action.
Secondly, the use of contract labour, where an individual is hired to provide personal services and invoices through an intermediary (typically their own limited company), became more challenging last year with the reform of the off-payroll, commonly known as IR35, legislation. Primarily aimed at tax collection by HMRC, the changes shifted more responsibility onto those hiring contract labour and increased their risk of tax liabilities and financial penalties.
However, during the first year of implementation, HMRC has taken a ‘light touch’ to enforcement. That is set to end from this April and we anticipate increased HMRC activity, particularly where organisations have not genuinely sought to understand and...
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