Case Study - National Minimum Wage Audit

A small, mission-driven UK charity found itself under an HMRC National Minimum Wage (NMW) investigation that had dragged on for nearly two years.

The potential financial exposure was considerable: HMRC indicated that the charity could face liabilities of up to £500,000, along with possible penalties of 200% and the highly damaging prospect of public “naming and shaming”.

Deeply concerned about these risks to both finances and reputation, the charity’s CFO and CHRO approached us for expert support. Their key objectives were to demonstrate robust compliance, address HMRC’s concerns, and close the investigation as swiftly as possible.

The action

The engagement began with an in-depth review of all investigation documents, working closely with the client’s leadership team to diagnose where HMRC’s concerns lay.

Through a strategic kick-off meeting, we explored current payroll processes, policy documentation, and internal practices relevant to NMW compliance. We then developed a comprehensive NMW risk document tailored to their situation, identifying sources of evidence already available within the organisation that could mitigate HMRC’s identified risks, particularly around working time.

Practical, charity-specific compliance solutions were proposed and explained to make NMW adherence manageable for both the charity and its employees.

Over three weeks, we guided the client as they gathered the required evidence. Each item was carefully reviewed and collated into a portfolio, presented in a clear, logical format tailored for HMRC’s review.

This process included crosschecking evidence against HMRC’s concerns, preparing explanatory notes, and ensuring completeness and clarity of the submission.

The results

Just four weeks after the evidence was submitted, HMRC responded positively, accepting the vast majority of our evidence and recommendations. Only a single case remained, the result of a minor contract error, which was swiftly addressed.

The final liability was reduced to under £500, penalties were avoided altogether, and the charity’s greatest fear, public naming and shaming, did not materialise.

In total, the project was completed within nine weeks, providing huge relief to the charity’s leadership and safeguarding both its finances and public reputation.