Tax Disputes & Investigations
Employer Specialist Services Tronc Schemes
TRONC SchemesTRONC schemes ('TRONCS') are widely used by businesses operating in the hospitality and leisure sector to distribute tips and gratuities given by customers to employees. TRONCS offer significant monetary savings (particularly National Insurance Contributions (NIC)) to both the businesses and employees which, in turn, can dramatically increase an employee's take-home pay at no additional cost to a business. TRONC scheme rules are complicated and specialist advice in this area is essential. The rules have changed greatly over the last few years and HM Revenue & Customs ('HMRC') closely examines all TRONC arrangements to ensure that they fully meet the terms for exemption from NIC. All hospitality businesses should regularly review their TRONC schemes to ensure that they are up to date and legally compliant. As an example of the savings which can be made, we were engagted by a large London hotel which generated approximately £750,000 per annum in discretionary service charges. Rather than distribute these funds via a TRONC the hotel, quite legally, used the funds to increase the level of basic pay to employees. This meant, however, that employees were paying over £80,000 per annum in employee NICs and the hotel almost £100,000 in employer contributions. Although the level of gross pay was reasonable the reduced net pay meant that the hotel found it difficult to recruit and retain staff and the standards of service were falling. By introducing a TRONC system employees no longer paid NICs on the distributions of service charges and their net pay increased, improving retention. The hotel decided that it would recycle half of its employer NIC savings back into the TRONC, meaning that a system of performance rewards and incentives could be paid. The 10 best performing staff each week each received almost £100 in extra payments, which had a significant effect on motivation, performance and customer service. The hotel itself saved approximately £50,000 per annum. How can OneE TDI help? OneE TDI is a leading adviser in this area. We have worked (and continue to work) with all types of hospitality business from high street chains, 3 Michelin Star restaurants, leading hotels to smaller, independent businesses and owner-managed restaurants or food-led pubs. We have also advised the British Hospitality Association (the leading trade body for the hospitality sector) and regularly contribute to the ongoing public debate on tips and TRONCS. Our TRONC schemes are innovative and flexible and are not just used to save NIC, but also to help control wage costs and reward performance. We successfully defend businesses that are challenged by HMRC and proactively advise on a range of issues, including: -
At the core of OneE TDI is a highly experienced team specialising in all areas of tax disputes and investigations work. We offer confidential, non-judgemental advice to best defend our clients and have a proven track record in successfully managing all contentious tax matters. We have successfully defended numerous businesses and ensured that TRONC enquiries by (or disputes with) HMRC were resolved quickly, fairly and with little disruption to the business itself. We provide a comprehensive service to accountancy and legal practitioners and their clients. Our advice saves our clients time and money and helps reduce their potential exposure to tax, interest and penalties. Please see the Testimonials kindly provided by our clients (or their accountants or lawyers), which confirm our levels of client service. Whilst we endeavour to provide informative and accurate information, the content on this site is for general information purposes only and should not be taken to constitute tax or legal advice which must always be tailored to individual circumstances. Please contact us if you would like to discuss matters. [Top] |
