Homecare Providers Under HMRC Scrutiny: Why National Minimum Wage Compliance Cannot Wait
Homecare providers are being actively targeted
HM Revenue & Customs has launched a targeted enforcement campaign focused on the homecare sector. Providers are being contacted directly and asked to complete self audits, while care workers are receiving leaflets encouraging them to come forward if they believe they have been underpaid. This is not a routine check. It is a clear signal that National Minimum Wage compliance for homecare providers is firmly in HMRC’s sights. From experience, we continue to see the same misunderstandings repeated across the sector. Unfortunately, these misconceptions often lead to serious financial and reputational consequences.
Paying the hourly rate does not guarantee compliance
One of the most common assumptions we hear is that paying carers at or above the hourly rate automatically ensures compliance. In reality, this is rarely the case in homecare. Underpayment frequently arises from unpaid travel time between visits, waiting time that is not recorded or paid, deductions for uniforms or training, or relying on enhanced or premium rates to offset unpaid hours. These are long established focus areas in HMRC investigations and are well understood by enforcement officers. If they exist within your pay structure, your business may already be at risk.
The penalties are severe and public
Failure to meet National Minimum Wage compliance for homecare providers can result in recovery of up to six years of arrears, penalties of up to 200 percent of the underpayment per worker capped at £20,000 per worker, public naming and shaming of non compliant employers, and potential criminal offences for poor record keeping or obstruction. Beyond the financial impact, the reputational damage can be devastating, particularly in a sector built on trust and care.
Responsibility sits with the employer
A common misconception is that responsibility can be shifted to an accountant or payroll provider. Under National Minimum Wage legislation, this is not the case. HMRC does not consider why an underpayment occurred when deciding whether to issue a Notice of Underpayment. The legal responsibility rests squarely with the employer and, ultimately, the directors. Understanding the rules that apply to your business is not optional.
Commissioners are not risk free either
Local authorities and commissioners are not insulated from responsibility. Working within a tight budget does not remove the obligation to commission care at rates that allow providers to operate lawfully. Buying homecare services at fee rates that cannot mathematically support National Minimum Wage compliance risks contributing to labour exploitation. Homecare Association continues to call for a National Contract for Care Services, including legally enforceable minimum commissioning rates that enable providers to comply with the law.
Early engagement makes a difference
Previous HMRC initiatives have shown that providers who engage early tend to fare better. When HMRC previously worked alongside the Homecare Association to offer voluntary advisory audits, providers who participated were later asked for significantly less documentary evidence than those who did not. Engagement, transparency, and proactive action matter.
Practical support is available
The Homecare Association’s National Minimum Wage Toolkit, developed in collaboration with Anthony Collins Solicitors, remains one of the most authoritative resources available to providers. It offers detailed guidance on identifying risk areas, assessing compliance, and correcting issues. Where specialist legal advice is required, practitioners such as Anna Dabek are widely recognised for their expertise in this area. At Augustus Payroll Services, we are also currently evaluating a new self audit tool designed to help providers test National Minimum Wage compliance for homecare providers before HMRC does. More information will follow shortly.
Do not wait for HMRC to tell you
Protecting care workers also protects your business. If you have not reviewed your National Minimum Wage compliance recently, now is the time. Proactive audits, accurate payroll processes, and expert support can prevent costly errors and safeguard both your workforce and your organisation.
Need support reviewing National Minimum Wage compliance?
If you are a homecare provider and are unsure whether your payroll processes fully meet National Minimum Wage requirements, now is the time to act. Proactive review is always safer than a reactive response to HMRC.
At Augustus Payroll Services, we support care providers with compliant payroll processing, clear audit trails, and practical guidance to help identify risk areas before they become costly problems.
If you would like to discuss your payroll setup or arrange a compliance review, please get in touch via our Contact Us page or email info@augustuspayroll.co.uk. Early action can protect your care workers, your business, and your reputation.
