Restaurant tips- back dated tax?!

icedoggydogg

I have worked in restaurants for many years. I am currently working in a new restaurant that opened 6 months ago. I am being told by my boss via his accountant that all the tips we have received todate need to have back dated tax deducted from them.

From my understanding if a tip is given to the staff, it is the staffs responsibility to declare it in terms of tax. If the tip goes into a tronc system or to the employer who then shares it out, it is the employers responsibility to sort out tax & NIC.

We keep all the tips between the staff and share them out equally, nothing to do with the boss. So why should we now have to back date all tips for taxation? Surely it s the responsibility of the individual to inform HMRC if their tax code is incorrect?

Thoughts/advice/legal positions?

Manyt thanks

Money_Grabber13579

IMO, yes, that would be correct. They aren't treated as employment income as such, because they aren't part of your wage. However, maybe your employer is doing this to ensure the whole thing stays above board?

icedoggydogg

Thankyou for your response. I understand his concerns because he feels responsibility ends with him. But now a load of people on minimum wage have to cough up a few hundred pounds to back date it.

Do you think its acceptable to let the owner start running the tip system from now and therefore not backdate the taxation as it was effectively run by the staff before?

Money_Grabber13579

Well the tax would still have to be paid at some point, after all, the income has been received, so tax has to be paid. Even if the owner did let all the employees sort it out themselves, you would by law have to declare all the tips, not just from now, if you see what I mean!

By the way, if the owner said the tip system only started now, that would be tax evasion, and very illegal!;)

DCodd

A bit of education for me here please if you wouldn't mind.

I have seen the section where you declare if you have paid someone but not deducted tax, on the return but never had cause to use it. Is that where you enter the tips and then HMRC would get SA from the listed recipients?

If not would the employer maintaining the tips payments not be liable for Employers NI?

Any

http://www.hmrc.gov.uk/manuals/pommanual/PAYE20160.htm

Any

DCodd wrote: »

A bit of education for me here please if you wouldn't mind.

I have seen the section where you declare if you have paid someone but not deducted tax, on the return but never had cause to use it. Is that where you enter the tips and then HMRC would get SA from the listed recipients?

If not would the employer maintaining the tips payments not be liable for Employers NI?

I like your signature:-)
Definitely confirms that as you have very good sense of humour you are neither:T

blue_ashleigh

Money_Grabber13579 wrote: »

Well the tax would still have to be paid at some point, after all, the income has been received, so tax has to be paid. Even if the owner did let all the employees sort it out themselves, you would by law have to declare all the tips, not just from now, if you see what I mean!

Do they really have to declare tips?!
Everywhere I've worked you just put your tips in a jar and take it home at the end of the night...

Elaine_Wilson

icedoggydogg wrote: »

Thankyou for your response. I understand his concerns because he feels responsibility ends with him. But now a load of people on minimum wage have to cough up a few hundred pounds to back date it.

Do you think its acceptable to let the owner start running the tip system from now and therefore not backdate the taxation as it was effectively run by the staff before?

A couple of points as you mention minimum wage. First, as had already been mentioned, the tips are subject to tax in any case so the staff should have been putting this money aside.

Secondly, the tips are in addition to the minimum wage. They cannot be counted towards the minimum wage even if the employer collects them (say, through a credit card payment) and then shares them out. Do make sure this is being dealt with correctly here.

AirlieBird

Elaine_Wilson wrote: »

Secondly, the tips are in addition to the minimum wage. They cannot be counted towards the minimum wage even if the employer collects them (say, through a credit card payment) and then shares them out. Do make sure this is being dealt with correctly here.

Tips can be used to top up wages to the minimum wage, although this will be illegal from October.

To the OP, you may find this page helpful: http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/WorkingAndPayingTax/DG_10026509

Any

I was thinking about this... And actually, if you are an MP, you don't have to pay taxes at all!:-))