Tips included in minimum wage

1:16am Tuesday 23rd January 2007

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RESTAURANT bosses have been told that waiters' tips can be included to take their salaries up to the minimum wage.

In new guidelines issued by HM Revenue and Customs, the changes will affect all industries where tips are common, such as hairdressing and hospitality.

The changes come as a U-turn for Revenue and Customs, which in 2003 launched the controversial Operation Gourmet, with the sole aim of tightening up on practices in the restaurant industry.

The campaign sparked a row over the minimum wage and whether tips should be subject to National Insurance contributions.

It was reported that the Government was set to make £3 billion from the operation, with many restaurant owners receiving huge bills for National Insurance.

Mike Turner, partner at Bentleys Chartered Accountants and financial director of Bolton Town Centre Management, said: "For the past three years, the changing regulations surrounding tax on tips has caused much controversy, with the majority of people believing that tips should be kept tax-free.

"Thus the news will come as a great triumph for most restaurant owners in Bolton and surrounding areas.

"The changes, however, may have come too late for some restaurant owners who have already paid their National Insurance bills, or have been forced into involuntary liquidation as a direct result.

"With Revenue and Customs claiming that its amended view on the tax liability of tips is a result of further legal advice and not an error on their part, compensation will not be given."