In this video Colin Johnson and Colin Abrahams discuss the difference between the tax and VAT treatment of mandatory and voluntary service charges.
Watch to find out more.
All employees over the school leaving age in the UK need to be paid over the National Minimum Wage (NMW). The hourly wage depends on the age of the employee and for over 25’s is currently £8.21 per hour. HMRC are carrying out increasing number of NMW compliance visits to ensure employers are adhering to minimum wage legislation, and the hospitality industry is one of the sectors which is being targeted due to the number of employees in the sector who are paid around the NMW level.
NMW legislation in its most basic form is pretty simple to implement. It becomes far more complicated where staff wages suffer deduction prior payment for the services they receive from their employer, such as the provision of accommodation or cleaning of uniforms, which are commonplace in the sector and it is vital that employers are aware of these interaction of these deductions with NMW requirements.
Employers are increasingly being caught out where they make deduction from wages for costs that they may have generally thought have nothing to do with NMW, such as the repayment of a short term loan, settling of a bar tab or deductions for breakages as in some circumstances these types of transactions can take an employees pay below NMW and cause the employer significant issues with HMRC.
Many NMW investigations are launched when a disgruntled employee reports their employer to HMRC and in 2017/2018 HMRC reported that they had identified £15.6 million of minimum wage arrears benefitting in the region of 200,000 employees through investigation.
If an employer is found to have underpaid NMW, even if it is due to a technicality the penalty regime in this area is severe and HMRC also “name and shame” employers for severe non-compliance.
A PAYE audit can help highlight areas of non-compliance and help address issues before they are picked up by HMRC and all employers are encouraged to review their procedures.
If you would like more information on this subject please contact Colin Johnson or call 01772 821021