Iceland facing £21m bill from HMRC over accusations it broke minimum wage rules with Christmas savings scheme

Discount supermarket has been running Christmas club savings scheme for decades

Iceland is facing a £21m bill from HM Revenue & Customs, which alleges that the discount supermarket chain broke minimum wage rules with a Christmas savings scheme.

The tax collector believes that the scheme, through which staff voluntarily had sums deducted from their wage packets each week to be saved in a separate account, meant pay dropped below the minimum wage.

HMRC said the alleged underpayment comes to about £3.5m a year over a six-year period. Iceland’s “Christmas club”, as it is known, has been operating for decades.

Iceland could also face a fine, which could be double the amount of the alleged underpayment, according to The Times, which first reported the story.

An HMRC spokesperson said: “HMRC does not comment on individual cases. All businesses, irrespective of size or business sector are responsible for paying the correct minimum wage to their staff.

“HMRC won’t hesitate to take action to ensure that workers receive what they are legally entitled to.”

Keith Hann, Iceland’s director of corporate affairs, said the company was in discussions with HMRC over the allegations.

“We hope that HMRC might see sense,” he said, adding that the Christmas club had “only become an issue as the differential between our pay rate and the minimum wage has narrowed”.

The 2019 UK national minimum wage is £8.21 per hour for workers aged 25 and over, falling to £7.70 for those in the 21 to 24 age bracket, £6.15 for those aged 18 to 20, and £4.35 for under-18s.