Paying National Minimum Wage generic notices

HMRC sending out online notices to check NMW

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I have had three in the last few days.  One for a director only company paying salary at the personal allowance level.  Two more where the director gets paid the same, but one has some part time staff and one pays his wife a small amount to do sales invoicing.  I would suggest that these are either fishing, based on incorrect assumptions or HMRC are in possession of some additional information.  Anyone else received any and have any opinions as to what is going on?

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By 0098087
21st May 2024 10:34

Yes. Had a load of them today. Not sure why they were sent!

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By Tom+Cross
21st May 2024 10:44

Four emails, during the early hours, of this morning, for only two clients.
The trouble with HMRC, amongst all the other 'troubles' which they have is, there is no consistency in their methodology. Am I surprised? Of course not.

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By Geoff56
21st May 2024 11:04

Yup; I've had one this morning. The client in question is definitely meeting his wage obligations.

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By Luke
21st May 2024 11:51

Yep, I've had 8 overnight and this morning. I only run 20 payrolls so awaiting the others.

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By SXGuy
21st May 2024 12:07

Had 3 today. All for Company directors.

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By FactChecker
21st May 2024 13:33

"what is going on?" ... that's easy - automation of nudge letters.

Whether there's a directing mind behind the selection criteria (and if so whether that mind understands the first thing about tax in general and OMBs in particular) is an entirely different and valid question ... to which no-one has been able to obtain an answer.

The problem is that nudge letters (introduced as a primary tool by that paragon of integrity, Mr Cummings) are win:win for HMRC ... cost next to nothing to issue, generate a few responses (and tax) that might not have happened otherwise, and act as a cosh to hit the taxpayer with if any potential mis-reporting is identified later.

The pain of wasted time is felt by others - including the agents.

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Replying to FactChecker:
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By raybackler
21st May 2024 14:07

Thanks for this. I was merely trying to find out whether this was a general fishing exercise or targeted at a few clients. The responses indicate it is a fishing expedition and can safely be ignored if everything is known to be in order.

I think someone has divided £12570 by 52 and somewhere between 35 and 40 for the hours and come up with a miss on NMW. Oops they forgot to miss those out who have ticked the box as directors!!

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Replying to raybackler:
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By FactChecker
21st May 2024 15:08

That sounds quite possible ... but before you (or anyone else) gets too relaxed, it's also possible that HMRC are hunting for fresh meat in that little-understood pool of whether or not a Director is purely receiving remuneration as an 'office holder' or (at least in part) as a worker.

Whether or not they fully understand it - per https://www.gov.uk/hmrc-internal-manuals/national-minimum-wage-manual/nm... - is debatable, but few agents do (and even fewer directors).
So ... a gentle heads-up that it's worth considering how robust would be the claim that no remuneration was for duties as a worker (and not performance of office holder duties).

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By raybackler
21st May 2024 15:22

So directors who have employment contracts for some or all of their work are caught by the NMW. Those who have no contract or a director’s service contract are office holders and not subject to NMW.

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Replying to raybackler:
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By FactChecker
21st May 2024 15:55

"So directors who have employment contracts for some or all of their work are caught by the NMW" = Yes (but only for their remuneration as a worker).

" Those who have no contract or a director’s service contract are office holders and not subject to NMW" = Yes (but watch out - 'lack of a written contract' isn't proof positive that they aren't being paid for some duties outside of their 'office holder' responsibilities ... that's where the waters get really quite murky).

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By More unearned luck
21st May 2024 19:13

So murky that I doubt HMRC go there; they are trying to catch 'real' employers underpaying 'true' employees. Scoring points off owner/manger businesses re the owners' pay seems to me to an abuse of power and a waste of HMRC's time, if it were to be done.

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By raybackler
21st May 2024 16:07

So directors who have employment contracts for some or all of their work are caught by the NMW. Those who have no contract or a director’s service contract are office holders and not subject to NMW.

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Replying to raybackler:
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By FactChecker
21st May 2024 16:19

Is this an accidental repeat of your post from 15:22?

If not, what is not clear in my response to that post?

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By raybackler
21st May 2024 17:05

Sorry, did the response from my iPhone whilst out. When I got back it was still sitting us unsent, so I hit send again. Technical issue I'm afraid.

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By neiltonks
21st May 2024 14:15

It would be interesting to know what the trigger for these is. I guess it probably has something to do with the FPS data, but that's useless for any remotely-accurate measuring against NMW because the information provided is nowhere near specific enough to allow that to be done.

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Replying to neiltonks:
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By FactChecker
21st May 2024 14:56

It would indeed be interesting to know what 'logic' (using the word loosely) lies behind the decision to create a trigger (as well as how that has been defined).
But the last 10+ years has taught me never to confuse nice/logical/sensible with extracting info from HMRC - especially when related to PAYE & RTI.

The cynic (or one of them!) in me wondered whether there was a convoluted chat somewhere within HMRC along the lines of:
- 'apparently people aren't happy about the scheduled change to include actual hours in pay period for each employment in each FPS ... they say it won't help us with NMW checking'
- 'well of course that's not why we want the hours figures - but here's an idea, why don't we send out NMW nudge letters based loosely on the 'hours range' FPS values that no-one believes anyway'
- 'why would we do that?'
- 'teach them a lesson! And we can claim that it's their fault but would have been more accurate if we had the real hours figures!'

All complete tosh (their logic) of course ... but the made-up conversation may just have taken place?

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By thebow70
21st May 2024 14:00

I have had 4 today and I can't see anything wrong, 2 director only and one weekly set hours. Do we just ignore them?

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By Southwestbeancounter
21st May 2024 15:06

I've had three so far over the last couple of days, and I have nine PAYE clients so I am waiting for the rest so I can ignore them too!

As for any reasoning behind it, well two of the three I have received thus far are clients who are currently CIS only and haven't run a payroll for more than 10 years so I am presuming everyone registered for PAYE will eventually get one!

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By Tom+Cross
21st May 2024 15:07

I'd imagine all driven by AI.
I saw a similar article, to this https://www.linkedin.com/pulse/ai-recruitment-new-reality-showcased-hm-r... in the Sunday Times.
Although I know I'm old, and set in my ways, I've always thought that the only way to satisfactorily attract and interview potential staff, was to take the time and trouble to meet and examine their abilities and personalities.
It seems to me that HMRC demonstrates a lazy attitude, which seems to accurately portray the current ethos.

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