Under the 'Tronc system' tips earned can legitimately escape NICs, provided various Inland Revenue rules are complied with.

However, PwC has seen an upsurge in Inland Revenue investigations and claims that restaurants are making errors in their Tronc operations, meaning that NICs are due.

The Revenue has been bolstered in its efforts by a ruling in the European Court of Human Rights that tips paid by cheque or credit card are the property of the employer, and can form part of the basic staff wage.

Richard Clarke, tax investigations specialist, PricewaterhouseCoopers said: 'Restaurants in London who use a "Tronc" system to pay tips to staff are highly likely to be on the Revenue's hit list for reclaiming NICs.

'If they find errors, the Revenue can look to recover unpaid taxes going back six years. So, a business with a turnover of £10m could be looking at an employer/employee NIC liability of £350,000 per year plus interest and penalties.'

Bob Cotton, chief executive of the British Hospitality Association, said the BHA and the Restaurant Association have engaged PricewaterhouseCoopers in detailed discussion with the Inland Revenue to agree a way forward on this issue.