The Inland Revenue has issued revised guidelines for employers over tronc schemes – the systems where tips are distributed between staff through an independent individual.
The changes come after consultation with the British Hospitality Association, backed by PricewaterhouseCoopers.
The concessions will mean that employers will not be penalised by the Inland Revenue for deducting credit card commission before transferring the service charge to the troncmaster.
Secondly, where the tronc monies are used to supplement pay to the level of the minimum wage, National Insurance Contributions will only be paid on this proportion of the tronc, not on the whole tronc as the Revenue previously claimed.
Bob Cotton, the chief executive of the BHA, said: "This represents a significant victory for common sense following the association’s negotiations with the Revenue, and they set the scene for a clearer understanding of what remain very complex negotiations."
This means businesses will have more freedom in the way they treat gratuities and pay them out, however it does not mean that all the previously issued NIC bills under Operation Gourmet are void.
