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HMRC internal manual

National Insurance Manual

From
HM Revenue & Customs
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Tips, gratuities and service charges: Tronc arrangements: Appointing a troncmaster

Appointing a troncmaster

Typically, an employee is appointed to administer the tronc and is usually referred toas the troncmaster. HMRC does not prescribe who the troncmaster should be. Sometimes thetroncmaster is appointed by a tronc committee who decide who would be the most suitableperson to take on the role. However, in some cases the employer appoints the troncmaster.The employer may choose any person they wish but if they choose an individual whoinfluences how the business is run, for example, a company director, this may indicatethat the employer has indirectly allocated the payments made from the tronc. Whenconsidering whether condition 2 of the gratuity disregard (NIM02922)is satisfied you must consider all the facts, see NIM02971.

If

  • the employer does not play any part in deciding what amounts are paid and to whom, and
  • there is no evidence to suggest that the employer established and controls a system that performs the allocation in such a way that the allocation can reasonably be said to reflect and give effect to the employer’s wishes

the payments from the tronc can be disregarded from earnings because the employer hasplayed no part, directly or indirectly, in the allocation of the tips. See NIM02956 for more information.

Example

The facts

Frank owns a pub and restaurant. Tips paid by cheque, debit and credit card are allpassed to Sharon, the troncmaster, who has been appointed by Frank. Sharon operates PAYEon the tips that she distributes. A staff committee decides on the allocation and Frankhas nothing to do with this.

Commentary

Even though Frank has appointed Sharon as troncmaster he has played no part, directlyor indirectly, in the allocation of the tips because he is not involved in determining whoshould receive tips and how much each employee should receive. In these circumstances, noNICs will be due on the tips received by the tronc members.