BRC hits out at HMRC over ‘unreasonable’ pay rules

The British Retail Consortium (BRC) has demanded HM Revenue and Customs (HMRC) ceases action against retailers who have breached pay rules deemed “no longer fit for purpose” by the trade body.

Retailers called the minimum wage regulations and chasing from the taxman “unreasonable” while the regulations are under review by ministers. The BRC said HMRC targeted retailers who had accidentally violated rules “too often” adding that most of the retailers targeted had taken “all reasonable steps to comply”.

In a letter to HMRC, the BRC argued that it was inappropriate for tax officials to chase retailers over cases relating to salaried workers and salary sacrifice schemes. At the start of the year Iceland was hit with a £21m tax bill over a Christmas saving scheme which allowed workers to set aside a proportion of their weekly wage to be claimed back later.

Helen Dickinson, CEO at the BRC, said in the letter: “The regulations, now two decades old, are no longer fit for purpose and it is right they are under review. Against this backdrop, it is unreasonable for HMRC to continue to take enforcement action against those employers who are operating reasonable pay practices designed to support colleagues.”

The HMRC said it enforced the pay rules “in line with the law” and added that it would not halt action against companies which breached it.

A HMRC statement read: “We can only enforce the law and the rules as they stand now and are therefore not in a position to pause or alter enforcement activity on the basis that there is an open consultation.

“Once the consultation closes, the government will analyse and assess the responses to decide what, if any, action it wishes to take. It is unlikely that any changes would apply retrospectively.”

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