The announcement by HM Revenue & Customs (HMRC) that it's making fundamental changes to the guidelines concerning troncs, the national minimum wage and national insurance contributions (NICs) is excellent news for the hospitality industry and a major embarrassment for HMRC.
The original guidance was criticised for its inefficiency, complexity and impracticality as well as its insistence on targeting a sector of industry already associated with low rates of pay and lean profit margins. The turnaround will be toasted in Britain's pubs, restaurants and hotels, and could potentially result in millions of pounds being refunded.
The extraordinary about-turn announced by HMRC now means that service paid by troncmasters towards the national minimum wage will no longer be liable for NICs, resulting in savings of almost 25%.
The same goes for tronc payments where the amount of payment wasn't specified in the employee's contract. Though this is a major victory for the hospitality industry, businesses that have paid NICs arrears to HMRC need to seek urgent professional advice to see whether they will be entitled
to repayments
The message to the hospitality trade is clear: raise a drink to victory - but act now to recoup payments before HMRC effects another U-turn!
Peter Davies
Hospitality group manager, Vantis
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