Millions of pounds will now have to be handed back to restaurants up and down the country after they were forced by the Revenue to use an incorrect interpretation of how waiter’s tips should be taxed.
The changes were announced today by the Revenue after twelve months of negotiation by Big Four firm PricewaterhouseCoopers and the British Hospitality Association.
‘This is not going to make a dent in Gordon Brown’s budget, but to restaurant owners in particular this is very important,’ said John Whiting, tax partner at PwC.
Many restaurant owners have already settled with the Revenue and as a result were forced to pay up to six years’ worth of national insurance contributions paid on tips given to waiters and waitresses.
Nick Scade, chairman of the Restaurant Association, and owner of the New Mill Restaurant, said: ‘This decision has justified us persevering with the negotiations. We challenged the Revenue alongside PwC and some tax lawyers.
‘They’ve backed down on some significant points, we have a much fairer regime for the future. The Revenue has said it will look back at some of the settlements.’
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