HMRC probe to investigate Next’s payroll practices

HM Revenue & Customs (HMRC) is understood to have launched an investigation into High Street fashion retailer Next, after issues with its new payroll software resulted in staff being paid incorrectly.

Next has already acknowledged that the rollout of new payroll software and processes had resulted in some of its staff experiencing financial difficulties.

As a result of its admission, the UK’s tax authority is going to look into the issues that occurred which resulted in an increase of both under and overpayments for weekly and monthly paid staff.

In particular, HMRC is going to investigate whether the payroll errors led staff to receiving less than the UK’s statutory minimum wage at the time.

In response to the investigations, first reported by The Sunday Times, Next confirmed that it had so far not found evidence that staff received less than the minimum wage.

However, should the HMRC inquiry find that staff were paid below current statutory wage rates, Next could face penalties of up to 200 per cent of the arrears owed to workers who were paid below the minimum wage.

“We acknowledge the frustration many colleagues have felt and reiterate our sincere apologies,” the company said in a statement to the same newspaper.

The public payroll failings of Next stand as a stark reminder to many employers of the importance of having effective payroll systems and processes. To find out how we can help you implement better payroll systems and procedures, please speak to us.