HMRC has issued a tax bill that could exceed £21 million following an investigation that resulted in Iceland being accused of failing to pay the minimum wage. A Christmas savings scheme offered to staff at Iceland Foods sits at the centre of the matter. Iceland's founder stated that the scheme was introduced to help low-paid staff set aside money for Christmas. HMRC has since claimed that as a result of the money being voluntarily deducted from employees' wage packets, Iceland technically hasn't paid the minimum wage in these instances.
Further to this, HMRC has accused the company of also failing to pay minimum wage where staff have been told to wear "sensible shoes" for work. In the month's employees bought appropriate footwear their pay technically fell below minimum wage after the cost of the shoes was deducted. HMRC has indicated that Iceland should have compensate staff for the shoes they were required to wear for work.
The alleged underpayment comes in at around £3.5 million per year. With the scheme having been running for 6 years that brings the total up to £21 million. In a worst-case scenario for Iceland a further £21 million fine could also be issued by HMRC, doubling the amount due. Whilst Iceland is fighting HMRC and stated it was prepared to go to court over the issue, other large retailers have fallen foul of similar technicalities and have had to pay back underpayments in addition to fines.
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