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HMRC internal manual

National Minimum Wage Manual

After notice of underpayment issued: collecting penalties

A penalty created by a Notice of Underpayment is payable to the Secretary of State (for the Department of Business Innovation and Skills). Penalties are paid into the Consolidated Fund.

HM Revenue & Customs Debt Management and Banking collect penalties from employers using the Strategic Accounting Framework Environment (SAFE) system. They manage the process under their collection strategy (NMWM14130) along with any other debts owed to the Department. However, no interest is due for late payment of national minimum wage penalties.

A penalty payslip must be issued with every notice which carries a penalty (NMWM13240).

Debt Management and Banking will collect the full amount of the penalty unless you advise them that the employer is entitled to pay the reduced amount (NMWM14050).

Where all the arrears on the notice and 50% of the penalty have been paid within 14 calendar days of the date of service of the Notice of Underpayment, you must arrange to have the penalty charge amended on the SAFE to account for the 50% reduction. This will ensure that collection of the remaining 50% of the original penalty is not pursued.