Conran Restaurants has confirmed that HM Revenue and Customs backed down from a legal battle with the group over demands for national insurance payments on tips.
The restaurant group said the Revenue had decided not to defend Conran’s appeal against its demands for millions of pounds in tax.
It was set to be heard by Special Commissioners towards the end of the year in what would have proved a test case for the industry.
The Revenue’s retreat from the Conran challenge is seen as the driving force behind its suprise U-turn last Friday, when it announced that recent legal advice had shown it had misinterpreted the law on tronc.
As a result, restaurateurs could now be free to claim back millions of pounds in payments, interest or compensation.
Conran has been battling the Revenue since 2003, when the tax collectors launched their Operation Gourmet crackdown on restaurant tronc schemes.
Des Gunewardena, chief executive of Conran Holdings, said: “This is an important decision for us, and an important decision for the restaurant industry. It is a shame that this dispute with the Revenue has run on for so many years but I am pleased that at last our policy and practice on this issue has been proved to be correct.”
Under its revised guidelines, the Revenue will now no longer seek national insurance payments on tronc money used to top salaries up to the national minimum, so long as it is distributed by an independent tronc master.