Much play has been made recently of the decision by HM Revenue & Customs not to pursue pub managers for tax on the benefit of accommodation. This was not, as had been reported, an "extra" tax, but a concession allowable to managers for the "better performance" of their jobs - something, which, fortunately the two trade associations, the British Beer & Pub Association (BBPA) and Association of Licensed Multiple Retailers (ALMR) were able to demonstrate.
But the situation will not go away. I have recently been contacted by one tenant who is being pursued by the Revenue in respect of live-in staff. The problem is that this pursuit often comes after a period when assessments have not been made, so the demand is back-dated and amounts to a fairly hefty claim.
It is not just the actual accommodation, either. Where staff take meals from the kitchen, use lighting and heating and other facilities, these are also perceived as taxable benefits. The Revenue's position is that if these were not supplied by the employer they would have to be bought by the individual taxpayer, so what is often seen as a gift is viewed as a part of the employee's remuneration package.
Clearly, the tax due on these "extras" ought to come out of the pocket of the employee. But if they are on PAYE, it is the duty of the employer to make the necessary deductions. In that case the tax man pursues the tenant, which is where all the problems arise.
In the past, where accommodation has been provided by the employer for employees, it has been excluded from a charge if it has been shown that it is necessary for the better performance of the employee's duties, and it is one of the kinds of employment in which it is customary to provide such accommodation. Of persuasive influence was the widespread requirement by the licensing justices under the previous system to insist that the holder of the licence should reside on the premises. This was not an absolute guarantee, of course, and the Inland Revenue, as it then was, took their own view on the necessity of being on site.
More recently, and until this manager's challenge, the Revenue have tightened up on this issue and say that the duties could be equally well performed whether the person lived at the pub or not. It is unlikely that there would be a condition on a premises licence requiring live-in managers. Their general position is that they will only allow exemption where there is a specific job reason for living in the specified accommodation (such as a warden, or residential housemaster).
As a recent letter writer says, the position of tenants and leaseholders is far less assured, but in my view that is due to the nature of the employment situation, which would be differently assessed. Tenants are for the most part self-employed and taking on a business lease or tenancy is very different from being employed by the owner or operator of the premises where you are expected to live. I do not think decisions on the question of taxable benefits have anything to do with political pressure - in my experience the Revenue takes a purely monetary position on most things.
All this means that readers must be aware that their own tax position can be affected by the benefits they give to their staff and that it is no good ignoring it. Take professional advice: there are some very good licensed trade accountants out there, so listen to what they suggest. You may avoid a crippling bill.