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HMRC internal manual

National Insurance Manual

HM Revenue & Customs
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Tips, gratuities and service charges: Establishing allocation: Powers to gain access to troncmaster records

Inspection powers – Regulation 97 of the Income Tax (Pay As You Earn) Regulations2003 and Paragraph 26 of Schedule 4 of the Social Security (Contributions) Regulations2001

Section 692 of the Income Tax (Earnings and Pensions) Act 2003 makes provision forregulations to be made about special arrangements for sharing tips among employees by aperson who is not their employer. Regulation 100 of the Income Tax (PAYE) Regulations 2003(“ the PAYE Regulations”) sets out the special arrangements for sharing tipsamong employees by a person who is not their employer. For the purposes of the PAYERegulations the person who shares the tips is regarded as the employer.


  • the person who shares out the tips is uncooperative and that person is not the principal employer, and
  • you are unable to get PAYE records from the principal employer, and
  • those PAYE records are required to help determine the NICs liability

you will need to take action against the person who shares out the tips and not theprincipal employer.

Where someone other than the principal employer is responsible for operating PAYE byvirtue of regulation 100, compliance staff have powers to ask that person to produce PAYE Records. See ECH2005. PAYE Records are defined in regulation97(2) of the PAYE Regulations.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)