Iceland Foods faces a £21mln bill from HM Revenue & Customs over a Christmas savings scheme offered to staff.
According to The Times, HMRC has told the supermarket group that the scheme –which allows low-paid staff to voluntarily set aside money from their weekly wages over the year to help to pay for Christmas – means it was technically paying below the minimum wage.
HMRC also said Iceland should have compensated staff for the “sensible shoes” they were told to wear to work.
Iceland provides safety shoes free of charge for use in warehouses and any employee can request them. Store staff are not required to wear the shoes.
The tax authority claims Iceland has underpaid about £3.5mln a year for six years, even though staff decided to take part in the scheme and received all the money they had set aside.
Iceland may have to pay a fine that could be double the amount of the alleged underpayment, which amounts to £21mln over the six-year period.
Iceland founder says HMRC dispute 'just madness'
Sir Malcolm Walker, Iceland’s founder and chief executive, said the dispute over the scheme was “just madness”. He intends to fight the HMRC claim and is prepared to go to court if necessary.
Walker said the government’s own Money Advice Service website has recommended that people should use “dedicated Christmas savings schemes [which] can help you to avoid dipping into your cash too early”.
He has also prepared a document called The Campaign for Common Sense, which describes the “growing red tape and bureaucracy affecting business”. But he said there were few in government interested in addressing the issue.
“They [HMRC] will not give in, so I went to see the business secretary Greg Clark. He promised he would look into it — never heard from him again,” he said.
“I sat next to Theresa May at a dinner and gave [The Campaign for Common Sense] to her. She said, ‘Give it to Philip as I don’t have my handbag.’ And I said, ‘Promise you will read it?’ She said, ‘Yes.’ I then spoke to the secretary for Wales who was full of ‘yeah yeah, this isn’t right”, but I never heard from him.”
Iceland is meeting with Kelly Tolhurst, a junior minister in the business department, this month. Malcolm said that he was “confident we will get a positive outcome”.