Taxation of live-in benefits

In this business, what goes around, comes around. I often have to re-visit old cases to find out the original decisions, which may still apply today.

Take taxation — this problem regularly crops up, because of the nature of the licensed trade and a number of employees and operators "live in". The tax man has a whole sheaf of guidance issued by HM Revenue & Customs on what is meant by "benefits in kind", such as would effectively increase someone's earnings and therefore attract more tax.

Being giving board and lodging in the licensed trade is just such a benefit. Most employees have to find their own meals and places to live, which they pay for out of their taxed income. But in some sectors it is accepted that either or both of these will be provided by the employer as part of the package.

Some years ago, this benefit was the subject of agreements negotiated by what were known as Wages Councils for different trades. The one that affected pubs was the Licensed Non-Residential Establishment Wages Council, which fixed deductions for food and accommodation which could be made by employers.

The sums involved were of course far less than the commercial rates, but it was accepted that the employee was paying for the benefit, so no tax implications arose.

These days, the tax man takes a closer look at what benefits may accrue to an individual as a result of his employment.

The argument about living accommodation hinges on whether there is an obligation to reside on the premises because of the nature of the work or demands of the job. There is no legal requirement for a licensee to reside at the pub where he or she works, but in most cases accommodation is provided and a tenant pays for this as part of the rent for the property, leaving it to the accountant to work out tax obligations.

But in respect of employees, it is often the employer who has to explain to the Revenue why he has not made a deduction in respect of such additional benefits. Even though it is the responsibility of the employee to declare income, those working in the trade assume the tax situation will be worked out by their boss, and in the case of failure to deduct proper tax, the Revenue has a clear come-back against the employer.

Q&A​

Alcohol purchases by 16-year-olds​

Q.​ I know that a 16-year-old can have an alcoholic drink with a meal if it is purchased for them by an adult (aged over 18). My question is: can the 16-year-old purchase the alcohol for himself to drink with a meal, if he is eating on his own, without an adult present?

A.​ This used to be the case, but it is not now. Since the passing of the Licensing Act 2003, the concession for young persons taking meals on their own has been abolished.

As you say, as long as the drink is bought by an adult (over 18), a young person between 16 and 18 is allowed by law to drink wine, beer or cider with a table meal taken anywhere in the premises, including the bar.

In the past, the concession has been allowed for 16-year-olds to buy their own beer and cider to consume at a meal. But the meal had to be taken in a part set aside for meals, such as a restaurant or dining area.

Under the new law, as long as the qualifications are met on purchase (which prevent 16-year-olds buying their own alcoholic drinks) then the meal can be taken anywhere. In pubs that allow meal service in the main bar, therefore, youngsters may join in and be supplied with the specified drinks quite legally.

This is a difficult area and licensees will have to be on their guard to ensure the situation is not abused. It is always open to the licence-holder to ban consumption by under-18s, if they think it is appropriate.

Club machines at events​

Q.​ A local social club near us sometimes applies for temporary event notices to allow non-members to use the club for an event and buy drinks from the bar. If that is the case, can these people use their jackpot machines while they are in the club?

A.​ Under the old terms for registration for jackpot machines, many of which are still covered by the Gaming Act 1968, the machines must not be made available for play "when the public have access to the premises, whether on payment or otherwise."

The position for clubs with new-style machine permits is that the machines must be made "available for use" only by persons who are members or individual guests of members. This would clearly exclude members of the public.

It is clear from this that individual guests of members, or visitors admitted under the rules (members of other clubs or sporting teams), are not to be considered members of the public and may play the machines. If the club runs an open event, with tickets available on the door or by prior application, persons attending may well be considered members of the public.

In some clubs the machines are contained in the bar area, which is restricted to members and guests, with the public event being held elsewhere, perhaps in the concert hall. In that case it could be argued that members of the public are not being given access to the premises where the machines are located, and cannot play them. This may therefore be in order.

Company name​

Q.​ Our small pub company has changed its name slightly. The pubs are still called by the same names, however, and no licensee has changed. Do we need to do anything?

A.​ If the company holds the premises licences for the pubs in your group, which seems likely, then you will need to notify each licensing authority of the change, so that they can amend the licence and the summary. The fee is £10.50. You should send back the original premises licence for amendment at the same time.

If the licensees are tenants and they hold the licences, then nothing needs to be done.