HMRC wage raid payroll checks: what should employers expect in 2026?

Since 7 April 2026, minimum wage enforcement has moved to the newly created Fair Work Agency, with HMRC officers now acting on its behalf, a change many UK employers still haven't clocked. What business owners informally call an "HMRC wage raid" is, in practice, a payroll compliance check covering PAYE records, RTI submissions and National Minimum Wage compliance. Get it wrong and the consequences are real: employers can face repaid arrears, statutory interest, and penalties of up to 100% of the tax underpaid.

For employers, the financial consequences can be significant. A payroll review may uncover unpaid PAYE, incorrect National Insurance calculations, underpaid wages or failures in RTI reporting. Beyond the immediate tax liability, HMRC can charge interest, issue penalties, and, in National Minimum Wage cases, require employers to repay wage arrears to workers.

What are HMRC wage raid payroll checks?

HMRC payslip check alert-style investigations are employer payroll checks carried out to confirm that PAYE, National Insurance, tax deductions and wage payments are accurate. These checks are usually conducted through HMRC compliance reviews, PAYE audits or National Minimum Wage investigations. HMRC may review payroll software records, payslips, RTI submissions and supporting documentation.

What can HMRC investigate during a payroll check?

During an HMRC payroll compliance check, employers may be asked to provide payroll records, PAYE information, RTI submissions, employee pay records and evidence supporting National Minimum Wage compliance checks. HMRC may also review records relating to tax and National Insurance deductions to verify that the correct amounts have been reported and paid. 

Why does HMRC launch payroll compliance checks?

HMRC may initiate a review because of risk profiling, data discrepancies, employee complaints, National Minimum Wage concerns or inconsistencies between reported and expected payroll data. Since April 2026, the Fair Work Agency has set strategic policy for minimum wage enforcement, and HMRC continues to carry out the checks on its behalf; investigations may still arise through employer selection exercises or worker complaints.

How does HMRC running payroll compliance work in practice?

HMRC running payroll compliance checks focus on whether employers are operating PAYE correctly and reporting employee payments on time. Every employer operating PAYE must complete payroll tasks during each tax month and report pay through RTI.

What payroll records must employers maintain?

Employers must keep accurate payroll records to operate PAYE correctly and meet their reporting obligations. These records should support employee pay calculations, tax and National Insurance deductions, statutory payments and Real Time Information (RTI) submissions. Maintaining complete documentation makes it easier to respond if HMRC requests evidence during a compliance review.

How do RTI submissions affect payroll compliance?

Under the RTI system, employers must submit payroll information to HMRC on or before employees are paid. The Full Payment Submission (FPS) allows HMRC to compare payroll data against wider tax records and identify anomalies that could trigger compliance reviews. Knowing how to submit an FPS to HMRC correctly is the difference between a clean payroll run and a compliance flag.

⚠️Warning: Missing or late RTI submissions don't automatically trigger an HMRC investigation, but repeated inaccuracies or reporting failures can increase the likelihood of HMRC contacting your business to review payroll records.

Why are National Minimum Wage checks becoming more important?

National Minimum Wage compliance is a major focus of payroll enforcement, particularly as National Living Wage rates rise each April. Through National Minimum Wage compliance checks, HMRC can review wage records, request supporting documentation and investigate whether workers have received at least the statutory minimum wage applicable to them.

Employers should keep accurate pay records and be able to demonstrate compliance if requested in case HMRC opens an investigation following an employer selection exercise or after receiving a complaint from a worker.

What happens during a National Minimum Wage investigation?

During National Minimum Wage compliance checks, HMRC may request payroll records and other documents to determine whether workers have received the correct minimum wage entitlement. Employers must be able to demonstrate that they have paid at least the applicable National Minimum Wage or National Living Wage and maintained adequate records.

What are the consequences of underpaying employees?

Where an investigation identifies underpayments, employers may be required to repay wage arrears to affected workers. HMRC, acting as an enforcement officer of the Fair Work Agency, can issue a Notice of Underpayment. The Fair Work Agency and the Department for Business and Trade can then impose a financial penalty of up to 200% of the underpayment, capped at £20,000 per worker, and publicly name the employer where arrears total £500 or more.

👉 To note: Since 7 April 2026, the Fair Work Agency (FWA), not HMRC alone, is responsible for National Minimum Wage enforcement policy, though HMRC officers continue to carry out day-to-day compliance checks on FWA's behalf.

How can employers identify payroll fraud risks?

Employers can reduce their exposure to payroll fraud by understanding the signs of payroll company fraud identified by HMRC. Fraudulent payroll arrangements can leave businesses responsible for unpaid taxes, payroll reporting failures and wider compliance risks.

What are the warning signs of payroll company fraud?

HMRC highlights several warning signs; employers should be cautious if labour costs appear unusually low, workers are moved unexpectedly between payroll providers, payments are made through unusual arrangements or the payroll company appears to have little evidence of genuine business activity. HMRC also recommends investigating any links between the payroll provider and the end client before entering into an arrangement. 

What due diligence should employers carry out?

Before appointing a payroll provider, employers should follow HMRC guidance on signs of payroll company fraud by carrying out appropriate due diligence. This includes checking VAT registration details, confirming who is responsible for employing and paying workers, reviewing payroll reporting evidence where available and keeping records of all supplier checks. Employers should clearly understand who processes payroll and who is legally responsible for meeting PAYE obligations.

What penalties can employers face after an HMRC payroll check?

Employers may face additional tax liabilities, interest charges and financial penalties following HMRC tax compliance checks if payroll errors are identified. The outcome will depend on the nature of the error and the circumstances surrounding the employer's compliance.

What happens if HMRC finds payroll errors?

If HMRC identifies payroll inaccuracies during a tax compliance check, employers may have to repay any underpaid PAYE tax and National Insurance contributions, together with statutory interest on the outstanding amount. Where the error resulted from a failure to take reasonable care or was made deliberately, HMRC may also charge a financial penalty. The level of the penalty depends on the employer's behaviour, whether the error was disclosed voluntarily, and how much tax was underpaid.

👉 To note: These are two distinct penalty regimes, so it's worth telling them apart:

What happens if an employer refuses to cooperate?

Employers who fail to provide requested information or refuse inspection requests may face penalties unless they can demonstrate a reasonable excuse. Cooperation typically yields a smoother and less costly compliance process.

How can employers prepare for HMRC payroll checks in 2026?

The best way to prepare for HMRC payroll checks is to review payroll processes regularly and ensure that PAYE reporting obligations are being met correctly. Following HMRC's guidance on running payroll and adopting recognised payroll compliance tips can help employers identify potential issues before they become compliance concerns.

Should employers perform payroll self-audits?

HMRC's and the Fair Work Agency's National Minimum Wage guidance encourage employers to carry out self-reviews of wage compliance records. A structured payroll audit can identify underpayments, reporting errors and documentation gaps before they become enforcement issues.

Which payroll areas should be reviewed first?

Employers should prioritise areas that directly affect payroll compliance, including PAYE reporting, National Insurance deductions, RTI submissions and National Minimum Wage obligations. Businesses can reduce compliance risks by carrying out appropriate due diligence on payroll providers and understanding how to identify payroll company fraud.

How can employers use HMRC payroll tools and support services?

Employers can access a range of official payroll guidance through HMRC. These resources explain employer responsibilities for PAYE, payroll reporting and Real Time Information (RTI) submissions, helping businesses meet their payroll obligations correctly.

Where can employers get HMRC payroll help?

Employers can access payroll help through official PAYE forms guidance, employer helplines and online support resources. These services can assist with payroll registration, tax codes, RTI reporting requirements and PAYE administration. Businesses should always use official HMRC channels when seeking payroll guidance to ensure information is up to date.

Are HMRC online payroll resources useful for employers?

Yes. HMRC's guidance on running payroll provides information on PAYE reporting, RTI submissions and employer payroll responsibilities. Reviewing official guidance regularly can help employers keep payroll processes aligned with current requirements.

A HMRC payroll check rarely becomes easier once it has started. Before your next payroll run, review your PAYE calculations, verify National Minimum Wage compliance, reconcile your RTI submissions, check any outsourced payroll providers and document every payroll process. If your business has not carried out a payroll review in the last 12 months, now is the time to do one.

Using a structured payroll best practices approach can help reduce reporting errors, strengthen audit readiness and improve confidence that payroll obligations are being met correctly. For growing businesses, staying ahead of HMRC and Fair Work Agency scrutiny often comes down to having payroll handled end-to-end: PayFit's managed payroll service keeps your RTI submissions, PAYE records and National Minimum Wage checks accurate and audit-ready, so you're never caught off guard by a compliance review.

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