HMRC Clears TiPJAR for Tipping and Tronc Revolution
TiPJAR, the business founded to revolutionise tipping in a cashless world, has received clearance from HM Revenue & Customs (HMRC), the UK’s tax authority, in a significant breakthrough that paves the way for workers and hospitality companies to change the way tips and gratuities are handled in pubs, bars, restaurants and hotels.
The stamp of approval makes TiPJAR the only system of its kind in the UK through which staff can collect and pool ‘digital’, or cashless, tips; doing away with the need for teams, venues and companies to organise and run complex and costly ‘tronc’ systems.
The green light from HMRC means that as long as an operator hands over full control of tip management to the staff via the TiPJAR platform, they cannot be held responsible for tax or National Insurance contributions on the tips collected and can move away from operating tronc systems in their business.
Through the TiPJAR platform, any tip paid by a customer ‘digitally’ – by card or smartphone – is equivalent to cash and is wholly owned by the staff themselves, completely by-passing the business and, therefore, the need to operate a tronc system. Money given in tips can be available to the teams as quickly as 20 minutes after finishing a shift.
Commenting on the news, TiPJAR founder James Brown, said: “We are delighted that HMRC agree with our view on how modern tipping can work better and work harder for both the employee and the business. We hope this clearance will encourage more companies, and their employees, to drop old fashioned tronc systems, which are a headache to organise, costly to run and lack transparency.
The complexities of the current tronc system are well documented in the hospitality industry and can leave staff waiting months for tips, teams and customers lacking trust in the process and operators facing fines for errors in management of the system.
Simon Bocca, a board director at TiPJAR, former COO at Fourth and founder of PayCaptain, added: “What the team have achieved here is game-changing for the UK hospitality industry. They have created a viable option for operators who do not want to pay for, administer and manage a tronc scheme in their business. This is real innovation in the hospitality tech space and a hard-fought result in the face of a lot of sceptics who thought there was no alternative to a traditional tronc system.”
A growing number of operators have already made the switch to TiPJAR, including BrewDog, Honest Burgers, Mission Mars, Punch, Qoot Co, Rose Pubs and Yard Sale Pizza. It is also being adopted in other industries where guests typically like to have the option to tip, such as hairdressing, beauty salons, mini-cabs, online gamers and health and fitness.
Alex Moore, chairman of TiPJAR and founder of Rosa’s Thai, commented: “Now more than ever, customers want to recognise great experiences and reward good service with a tip and, at the same time, fewer of us are using cash. TiPJAR was designed to work like cash, so it facilitates instant reward and recognition, re-imagining the true purpose of leaving some money on the table by way of thanks in an increasingly digital world. It’s a brilliant solution for workers and now, with this clearance from HMRC, it will make a massive difference to companies, too.”
While the system is completely flexible in terms of the frequency of payments and lead time between tips being paid and shared out, hospitality venues that operate via TiPJAR typically distribute tips equally amongst all hourly paid stuff, including kitchen teams, and in line with the number of hours worked.