NIM02923 - Tips, gratuities and service charges: Gratuity disregard conditions: Example - NICs due, neither of the gratuity disregard conditions are satisfied

Example

Facts

Maria, the proprietor of a restaurant, intends that all the cash tips left on the tables will be paid to staff. To ensure the kitchen staff get a share, she collects all the cash tips and shares them out to the waiting and kitchen staff at the end of each day.

Commentary

Neither of the conditions in the gratuity disregard (NIM02905) are satisfied. In relation to the first condition, Maria has paid the tips to her employees. In relation to the second condition, she decides on the allocation. NICs are payable on these tips.