Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what steps he is taking to tackle (a) illegal levels of pay, (b) furlough fraud, (c) double record keeping and (d) VAT fraud in Leicester’s garment Industry.
HMRC enforce the National Minimum and National Living Wage (NMW) in line with the law and policy set out by the Department for Business, Energy and Industrial Strategy (BEIS).
All businesses, irrespective of size or sector, are responsible for paying the correct minimum wage to their staff. Consequences for not complying with paying NMW can include penalties of 200% of the arrears, public naming and, for the worst offences, criminal prosecution.
Breaches of NMW legislation are normally a civil matter, but the most serious cases involving obstruction, falsifying of documents by, for example, creating a second set of ‘compliant records’ or wilful failure to pay workers the minimum wage that form part of a pattern of wider criminality may be referred to HMRC’s Fraud Investigation Service and subsequently to the Crown Prosecution Service who decide whether or not to prosecute.
Since 2012-13, HMRC’s NMW team has investigated 150 textile trade employers (59 employers in Leicester), recovering over £215,000 in wage arrears for over 400 workers and issued over £325,000 of penalties to employers.
As a result of the widespread allegations about labour exploitation in Leicester this year, a new multi-agency taskforce (Operation Tacit) led by the Gangmasters and Labour Abuse Authority (GLAA) has been set up to bring together the enforcement bodies (HMRC, Employment Agencies Standards Inspectorate (BEIS), Leicestershire Police, National Crime Agency, Leicester City Council, Department for Work and Pensions and Home Office Immigration Enforcement).
Across tax and the NMW, HMRC have a significant number of live investigations involving businesses in the textile sector (over 90 NMW investigations and over 30 tax investigations), a large majority of which relate to Leicester. In 2019/20 HMRC completed 25 separate investigations into the VAT affairs of businesses in the textile trade in Leicester alone and in doing so recovered more than £2 million of tax that would otherwise have been lost and facilitated 21 director disqualifications relating to the textile sector.
HMRC are also taking steps to counteract those seeking to abuse the COVID-19 support schemes. In line with other “payment-out” regimes, HMRC undertake pre-payment authentication and risking to identify and block fraudulent claims. HMRC also carry out proportionate risk-based post-payment compliance checks to test the accuracy of claims they receive. HMRC are able to retrospectively audit all aspects of the COVID-19 schemes, with scope to claw back fraudulent or inaccurate claims, applying their existing compliance approaches.
HMRC take seriously and review all complaints from workers referred by the Acas helpline, or received via the online complaints form, and investigate as appropriate. If anyone thinks they are not receiving at least the minimum wage, they can contact Acas, in confidence, on 0300 123 1100 or submit a query online using the link: https://www.gov.uk/government/publications/pay-and-work-rights-complaints.