Small and medium-sized businesses in Cumbria are being targeted as part of a crackdown by HMRC on possible non-compliance with the National Minimum Wage.

Cumbria is one of 11 locations across the UK being looked at by the tax authority. 

Businesses found guilty of non-compliance could face demands to pay NMW arrears to workers along with increased National Insurance Contributions.

HMRC has allocated more than £27 million towards dealing with NMW non-compliance, emphasising regional enforcement.

The targeted areas are selected based on data suggesting a larger volume of workers potentially receiving below the NMW rate, and intelligence collected including worker complaints in the region.

Kyle Newton, head of National Minimum Wage at accountancy and advisory firm Azets UK, said: "Maintaining compliance with National Minimum Wage is commonly misunderstood, with the calculation made up of several components across five core pillars – it is not just an hourly rate of pay.

"As an employer, unless you understand these pillars and have policies in place to govern and control each, you are at risk of non-compliance.

“With HMRC continually ramping up enforcement and the government granting the Low Pay Commission further powers to align NMW rates with real living costs, now more than ever there is a greater probability of business facing scrutiny. 

"Employers should take proactive steps to ensure compliance before a letter lands on their desk.”

Cumbrian businesses identified by the HMRC will initially receive a 'nudge' letter  outlining common areas which could result in NMW non-compliance.

This is followed by the offer of a free health-check.

If this offer is declined, a formal enquiry by HMRC will follow.

Mr Newton said: “By taking proactive steps to ensure compliance and mitigate risk, businesses will avoid the 200 per cent legal penalties, protect their reputation, and ensure fair treatment of their employees.”