Automatic gratuities across Bermuda’s hospitality sector are under review by the Office of the Tax Commissioner.

A survey of gratuities was e-mailed to restaurant owners and hoteliers last week.

The questionnaire may be linked to the Government’s extension of payroll tax relief for hotels, restaurants, bars and nightclubs still hit hard by the Covid-19 pandemic, according to Stephen Todd, chief executive of the Bermuda Hotel Association.

The wording of the e-mail last Tuesday reportedly sparked concern among some restaurant owners of a potential tax on tips.

But a spokeswoman for the OTC said that the survey was a data-gathering exercise.

She told The Royal Gazette: “The Office of the Tax Commissioner recently sent out a questionnaire to better understand employers in the hospitality industry — specifically bars, restaurants and hotels.

“The purpose of the survey is to gather information on how these employers treat automatic gratuities, not an attempt to apply a tax.”

The restaurant division of the Bermuda Chamber of Commerce met on Thursday to discuss the e-mail, which came with a demand for details on automatic gratuities over the last fiscal year.

One restaurant owner told the Gazette: “It came out of the blue — we don’t really know or understand the intent of it.”

Mr Todd said he had contacted the OTC directly after getting an inquiry from a restaurateur.

He added there was “no apprehension about gratuity or service charged being subjected to any form of payroll tax going forward”.

But he said he could see how the e-mail could have caused “concern” among recipients.

“I believe it’s linked to the extension of payroll tax concessions as a result of the ongoing pandemic.”

He said the message had gone out “over a wide cross-section of bars, restaurants and hotels”.

David Burt, the Premier and finance minister, said in the 2022-23 Budget statement on February 25 that the Government would keep the concessions going for “at least another six months” to help the sector to recover.

Opening with “Dear Taxpayer”, the message states: “The Office of the Tax Commissioner is reviewing the treatment of automatic gratuities for the Hospitality Industry under the authority of Section 44 of the Taxes Management Act 1976”.

“Please include the tax identification number and business name in the subject line with your response.”

It asked for “the total automatic gratuities earned and distributed to employees for the period April 2021 through March 31, 2022”.

The seven questions included whether the business distributed “the full amount of automatic gratuities to employees”.

It also asked if a client was able to “legally refuse to pay the business an automatic gratuity”.

Recipients were asked to respond “on or before” this Friday.