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VAT ON VOLUNTARY TIPS BY CARD ON A CLUB

Can my employer charge me 20% of my voluntary earned tips .

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I'm in a tricky situation recently I started working at a nightclub as a waitress and customers already pay a 15% service charge. 
I get paid my basic salary and will get paid voluntary tips by some customers however my new employer has just told me I will be discounted of this Voluntary tips paid by card by customers 20% as he said as a business he is charged VAT , and if they pay by certain banks will be another 2.5% less .
And another 20% to go to other employees like Kitchen staff etc which I think is fair .

however I will like to know if this is correct ?

as I had understood businesses only get charged VAT when service is compolsury which in this place is but apart from that they also have separately on the bill voluntary tips . (so does voluntary tips paid by customers ) gets VAT too ? 
 

 

thank you 

Replies (11)

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By Paul Crowley
04th Oct 2021 16:56

Everythings sounds a bit adrift
Tips are taxable as below

https://www.gov.uk/guidance/employee-gets-tips-gratuities-or-service-cha...

If tip did not go through a tronc then you need to declare yourself

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RLI
By lionofludesch
04th Oct 2021 17:34

Even if there was any merit in his argument, it should be a sixth, not 20%.

Is there not some legislation on its way through Parliament at the moment regarding tips? I didn't take much gorm to be honest, but I thought I saw something last week.

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Replying to lionofludesch:
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By Paul Crowley
04th Oct 2021 17:23

Now you mention it, I think you are correct

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Replying to Paul Crowley:
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By Warrior13
04th Oct 2021 18:13

Thank you for your reply .
I’m owed a month worth of tips
I believe 20% VAT of voluntary tip
is quite a lot and I never had that much taken out of my tips in any place before, considering I already have to give 20% off
To other staff .
Also we don’t get any of the 15% compulsory service charge .

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Replying to Warrior13:
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By lionofludesch
04th Oct 2021 18:41

Warrior13 wrote:

Thank you for your reply .
I’m owed a month worth of tips and before I send my invoice today I would like to know exactly where do I legally stand .
I believe 20% VAT of voluntary tip
is quite a lot and I never had that much taken out of my tips in any place before, considering I already have to give 20% off
To other staff .
Also we don’t get any of the 15% compulsory service charge .

There's no VAT on voluntary tips.

If the restaurant is paying the VAT over they are voluntarily tipping HMRC.

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Replying to Warrior13:
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By Wanderer
04th Oct 2021 19:06

Warrior13 wrote:

I’m owed a month worth of tips.

You need to explain why you are sending an invoice.
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Replying to Warrior13:
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By Leywood
04th Oct 2021 21:49

Why are you sending an invoice when you are an employee?

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Replying to Leywood:
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By Warrior13
04th Oct 2021 22:02

That’s another point I don’t understand,
Why are we asked to keep our own track of tips (with photo proof or it won’t be paid) then send a separate invoice .
I don’t mean to be rude problematic or ungrateful to my employers I am just very much confused as I have never experienced this in any job .

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Replying to Warrior13:
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By lionofludesch
04th Oct 2021 22:26

Warrior13 wrote:

That’s another point I don’t understand,
Why are we asked to keep our own track of tips (with photo proof or it won’t be paid) then send a separate invoice .
I don’t mean to be rude problematic or ungrateful to my employers I am just very much confused as I have never experienced this in any job .

There's a good chance that, rather than being dishonest, your employer is just pretty carp at bookkeeping.

Not that that should allow him to take your money.

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Danny Kent
By Viciuno
04th Oct 2021 18:39

This is worth a read:

https://www.gov.uk/hmrc-internal-manuals/vat-supply-and-consideration/va...

Could be that owner is simply unable/unwilling to separate out compulsory/non-compulsory tips so declares output VAT on them all to save them the admin headache.

Probably not what you want to hear but the cost of splitting these out probably outweighs the VAT "savings" which they wouldn't enjoy anyway so they don't bother.

I'd be wary how you approach the matter though, the wording "where do I legally stand" might get your bosses back up.

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Replying to Viciuno:
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By lionofludesch
04th Oct 2021 18:44

Viciuno wrote:

This is worth a read:

https://www.gov.uk/hmrc-internal-manuals/vat-supply-and-consideration/va...

Could be that owner is simply unable/unwilling to separate out compulsory/non-compulsory tips so declares output VAT on them all to save them the admin headache.

Probably not what you want to hear but the cost of splitting these out probably outweighs the VAT "savings" which they wouldn't enjoy anyway so they don't bother.

I'd be wary how you approach the matter though, the wording "where do I legally stand" might get your bosses back up.

If he wants to pay over the odds, that's his lookout.

But he shouldn't be stealing it from his staff. His gift to HMRC - not his staff's.

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