Restaurants which run their tronc through a separate payroll are to face even more paperwork as HM Revenue & Customs (HMRC) continues its clampdown on tipping.

HMRC now wants troncmasters to issue P46 forms to new employees who lack a P45. The P46 helps determine the right tax code.

According to Vantis tax consultant Peter Davies, the new initiative appears to stem from suspicion that disjointed payroll systems could be allowing restaurant employees to escape higher tax brackets.

The requirement for P46 forms will affect the 50-60% of restaurant schemes where troncmasters are registered to run a separate payroll.

Failure to complete and return P46s to HMRC could attract financial penalties.

Davies said the requirement has always existed but has been ignored by officials until now because troncmasters simply deduct the basic rate of tax.

He suspected the new stance stemmed from the inability of the Revenue's systems to marry employees' payroll and tronc earnings to see if they add up to a higher tax rate.

Davies believed the new burden would prompt many troncmasters to abandon their schemes.

"Most troncmasters are members of staff who run the system as a favour to everybody else but have no real knowledge of the tax system," said Davies.

"When you start adding more and more requirements, it becomes difficult, and costly mistakes can be made through ignorance."

Davies reckoned it was now cheaper and easier to run troncs through an employer's payroll, as they no longer attract Revenue hostility or national insurance.

But he advised firms to seek professional advice before switching schemes.

"If you don't set up the tronc correctly, you will be presenting the Revenue with an open goal," Davies warned.

www.hmrc.gov.uk

By Angela Frewin

 

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