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National Minimum Wage Penalty

HMRC National Minimum Wage Penalty Case Study

Our client, “MR” runs a popular business and employs several full-time and part-time on an hourly rate basis.

Recently a disgruntled former employee, reported MR to HMRC, who alleged that he had not been paid the National Minimum Wage whilst employed. HMRC investigated the complaint and issued MR with a Notice of Arrears, for the alleged sums owed to the former employee and a penalty equal to 100% of the alleged underpayment.  The total amount claimed was £50,000.

This unexpected and unwarranted demand left MR’s business under immense financial stress and the only way he could have paid the debt was by selling the family home.

MR instructed us to appeal the decision notice via the Courts. We investigated the former employees claim and provided our client with advice and representation in the claim which was defended by HMRC.

Based on the preliminary evidence, Monarch Solicitors employment litigation team were able to advise MR that he had good grounds to appeal the allegations.

We put forward MR’s position that the former employee had been paid correctly and the claim was completely without merit.

Our litigation solicitors swiftly took action and obtained witness statements from MR and the other members of his staff for purposes to support his position. We also gathered MR’s crucial evidence.

Upon disclosure of the statements from the former employee, their witnesses and with reference to MR’s payment records, it was abundantly clear that the former employee had not been truthful in their allegations.

Despite the evidence, HMRC maintained their heavy-handed and unreasonable stance. Monarch advised MR to stand steadfast in the face of HMRC’s demands and if necessary, proceed to a final hearing where the evidence would be able to speak for itself.

The matter proceeded to a final Tribunal hearing, which lasted for 3 days. The parties provided oral witness evidence and HMRC’s glaring inadequacies during the investigation process, along with the untruthful nature of the former employee’s claim, were brought to light.

The Judge ordered that further evidence was required to assist the Tribunal and adjourned the hearing again to allow the parties to obtain the evidence.

HMRC, almost immediately after the 3-day hearing, offered to settle the matter and pay MR’s legal costs.

This was a dramatic U-turn in HMRC’s stance. We quickly proceeded to settlement and the court proceedings were brought to a close.

Thanks to Monarch Solicitors employment and tax litigation lawyers careful scrutiny of the evidence and robust advice, MR was not ordered to pay this amount.

Monarch’s client still continues to trade successfully, and he lives happily with his wife in their family home.

If you are facing any kind of tax dispute or penalty with HMRC please contact our tax and litigation solicitors in Manchester on 0161 820 8888 and solicitors in London on 0208 889 8888 for immediate assistance.

Don’t wait until it is too late.

Call our tax litigation and employment law experts on 0161 820 8888 for ours tax solicitors in Manchester or 0208 889 8888 for our tax solicitors in London.

We will happily provide a free 30-minute consultation on your matter. Give us a call today!

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