New photo Iceland locked in 'idiotic' £48m battle with the taxman over savings club and free shoes for staff

Iceland is at war with the taxman over an 'idiotic' £48million bill it faces for a savings club and rules asking staff to wear smart shoes.

The frozen food giant said HM Revenue & Customs was wasting public money on probing its finances, with founder Sir Malcolm Walker branding it 'madness'.

HMRC claims a Christmas savings scheme offered to staff and rules asking them to wear 'suitable' shoes as part of their uniform break minimum wage rules.

Iceland said HM Revenue & Customs was wasting public money on probing its finances, with founder Sir Malcolm Walker (pictured) branding it 'madness'

But Richard Walker, Iceland's managing director and son of the founder, said: 'We're proud to have paid £1.4billion in UK taxes over the last 13 years, and have always tried to do the right thing for our own people. At a time when the UK High Street is under unprecedented pressure, this is idiotic.'

Iceland's Christmas savings scheme allows staff to put aside some wages into a ring-fenced pot of cash. They can withdraw the money at any time.

But HMRC says the payments caused some staff's take-home wages to fall below the minimum amount required by law, even though they received the money later on.

It has told Iceland to repay £21million put into the scheme by staff, or £3.5million annually over six years.

The retailer could also be forced to pay the same amount again in a fine for breaching the rules, taking the bill to £42million.

Separately, HMRC says Iceland should pay almost £6million compensation to staff who have bought shoes for work, leaving the total bill approaching a possible £48million.

This is because Iceland's staff rules ask them to wear 'suitable dark shoes'. It offers employees free pairs of safety shoes on request.

But HMRC said those who spent money on smart shoes on any given week may have also fallen below the minimum wage threshold.

It says this could have amounted to two pairs of £20 shoes per year, a figure that could reach £5.8million overall for its 24,000 staff.

Sir Malcolm, who founded Iceland in 1970, has vowed to fight the claims in court if necessary.

Writing on the company's website this year, he said: 'Although we have continued to raise pay each year, the introduction of the national living wage has brought our rates much closer to the legal minimum and this has recently brought us under the baleful gaze of the HMRC minimum wage task force.

'You'd think HMRC might put more effort into chasing the £1billion of corporation tax successfully avoided by the likes of Apple, Facebook and Google, or the VAT dodged on Amazon and Ebay.

'Particularly under a Conservative government, surely the public sector's top priority should be to support and encourage responsible wealth creators, not to harass them?'

A spokesman for HM Revenue & Customs said it did not comment on specific cases.

But he added: '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.'

The spokesman said HMRC judged cases individually but that its response would depend on whether employees faced consequences for not wearing certain pieces of clothing.

It 'named and shamed' 179 companies last year for underpaying staff, with Karen Millen and Shoe Zone among those it singled out for requiring staff to wear uniforms.

Sir Malcolm told the Times he had personally approached Business Secretary Greg Clark about Iceland's case but said: 'He promised he would look into it – never heard from him again.'

A spokesman for Iceland yesterday said the company was due to meet HMRC this month.

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News Pictures Iceland locked in 'idiotic' £48m battle with the taxman over savings club and free shoes for staff

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