Archive August 2021

A client wants to know how to deal with burnout in the workplace. They also want a brief explanation of what it means and how to spot the signs.

The term ‘burnout’ has become more prevalent in recent times as employers try to manage the impact that increasing workplace demands have on employees’ health. This has only become more apparent during 2020, when many employees may have faced increased workloads, uncertainty and general pressure due to the outbreak of COVID-19.

According to the World Health Organisation (WHO), common symptoms of burnout include:

  • feelings of energy depletion or mental exhaustion
  • increased mental distance from one’s job
  • feelings of negativism or cynicism related to one’s job
  • reduced professional efficacy.

A key aspect of the WHO’s definition is that burnout only relates to work-related stress, which means that clients are taking the right steps by wanting to know more and acknowledging that they play an important role in prevention. One of the key stumbling blocks is that burnout, and by association work-related stress, can be viewed as ‘part of the job’ in many industries, or a necessity due to the challenges posed by the pandemic.

As burnout is recognised as an occupational phenomenon, it is obvious that it exists and is contributed to by employment, especially in a year where employees have faced the fears, uncertainty and stresses associated with working through a global pandemic.

Not all staff were furloughed, and for those who have worked throughout the pandemic, an increase in workload may have caused signs of burnout to start to show, and impact their performance overall. Clients are therefore best placed to interject and seek to prevent burnout occurring, or to support those who are burnt out.

Clients can do this by:

  • Assessing working hours and workloads for any imbalance and ensure employees have the support they need to meet targets
  • Ensuring employees have the training they need to be able to efficiently carry out their tasks
  • Avoiding creating a situation where staff are pressured into working long hours or taking work home with them
  • Encouraging employees to take their rest breaks and annual leave
  • Ensuring availability of cover during an employee’s annual leave so they don’t feel like they need to “log in” to avoid a pile-up of work then they return
  • Offering flexible working, or working from home
  • Keeping an ‘open door’ policy where employees can discuss any concerns they have.

While some may think that this is a personal syndrome and something for an individual to deal with, this is an attitude that can lead to burnout becoming prevalent in their business and having a significant negative impact on factors such as retention, productivity, and growth.


I have a client who owns 25% of the ordinary voting shares of a close company, but she is not a director or employee nor is she connected to a director or employee of the company. The company has lent her father £25,000 interest-free. As neither her father nor the client is an employee or connected to one, is there still a benefit in kind on the loan? 

What is the charge?

Part 3, Chapter 7 ITEPA 2003 sets out the provisions that deal with taxable cheap loans to employees. In order for chapter 7 to apply, the loan needs to be an ‘employment-related loan’ which is defined in section 174 ITEPA 2003. It requires that the loan is made to an employee or a relative of an employee (s174(1) ITEPA 2003). As to whether the client or her father is an employee, one should also consider whether there is any scope that either of them could arguably be a director as defined under s67 ITEPA 2003 (see also HMRC Manual EIM20200). If the criteria in s174 ITEPA 2003 is not met, then there would be no benefit in kind charge under Chapter 7.

However, although not chargeable as a benefit in kind on the employment front, we need to consider whether s1064 CTA 2010 would be in point to trigger a distribution charge.

S1064 CTA 2010 deems the close company as having made a distribution to a participator if the company incurs expenditure in the provision of certain benefits for them. Benefits in this case would include the interest-free loan that the company has made.

Firstly, we should look to see whether the client’s father would fall within the definition of ‘participator’. S1069 CTA 2010 extends the meaning of participator to include associates of the participator for the purposes of s1064 CTA 2010. The client, owning 25% of the shares in the close company will be a participator under s454 CTA 2010 and as her father will fall within the meaning of ‘relative’ (s448(2)(b) CTA 2010), he will be an associate of a participator. Therefore, there will be a distribution deemed to have been made by the company.

Who is charged?

The company is treated as making a distribution to the participator (s1064(2) CTA 2010) and any references to a participator in s1064 also include an associate of a participator (s1069(1)). This would suggest that the distribution is treated as if it was made to the father.  We need to keep in mind that this is from the company’s perspective and for the purposes of the Corporation Tax Acts.

For the charge to income tax on distributions, s385 ITTOIA 2005 sets out the person liable to the charge as any person whom any distribution is made or treated as made, or the person receiving or entitled to the distribution. This indicates that the income tax charge is likely to be levied on the father as the recipient. HMRC manual page SAIM5020 also suggests that HMRC are of this view as well.

How much is charged?

The quantum of the deemed distribution is determined using the same method we would use to ascertain the beneficial loan charge amount for an employee/director under Chapter 7, Part 3 ITEPA 2003. This is not the loan amount that has been advanced to the father, but the cash equivalent of the benefit that is charged to tax.

Of course, should the participator make good the full amount of the cash equivalent as determined above, then there would be no amount treated as a distribution to the participator.

In summary, there is no benefit in kind charge applicable to the client, however, to the extent the expense is not made good, there is a deemed distribution charge on the father. As an aside, although not part of the query, I should mention that the company should consider any liability under s455 CTA 2010 if not already done so.

Camper van hire

My client runs a camper van hire business and with the increase in “staycations” bookings are through the roof. She hires the vans out for holidays or day trips, and they are also popular as wedding transport. She has also started selling face value vouchers at daily or weekly hire rates. Please could you advise on the VAT treatment given that there is currently a reduced rate for holiday accommodation.


HMRC have confirmed in VAT Notice 709/3 that the hire of what they describe as a “motorhome” will qualify for the temporary reduced rate provided it is specifically for holiday accommodation.  The temporary reduced rate is currently 5% until 30th September 2021, when it will increase to 12.5% from 1.10.21- 31.3.22. After the end of March 2022, it is expected the rate will revert to 20%, unless HMRC extend the temporary rate.

However, daily hires, whether for day trips or wedding transport (whether with or without a driver), will be standard rated as the vans are not being provided as holiday accommodation.

Usually, the sale of a voucher for this type of supply would qualify as a single purpose face value voucher, where the place of supply and liability of the redemption supply is known at the time of issue. However, in this scenario, if the vouchers could be redeemed for standard rated wedding or daily hire, or holiday accommodation at either 5%, 12.5% or 20%, then the vouchers would be treated as multi-purpose face value vouchers. As such they would be outside the scope of VAT when issued and VAT at the appropriate rate brought to account when redeemed.

It is also worth mentioning deposits. If a deposit is taken as a pre-payment to secure a booking, then it creates an actual tax point to the extent of the deposit value. If the booking is cancelled and the deposit retained, then it remains consideration and cannot be treated as compensation.

However, a deposit taken as a security against damage to the van is outside the scope at the time it is taken and if it is retained to cover the cost of repairing damage, then it remains outside the scope as compensation for the loss or damage incurred.

Supply of land or supply of services

My client has a field where he allows people to walk their dogs. He charges them for the use of the field as a safe and secure dog-walking area and is promoting it as such. Should he be accounting for VAT on that charge?He is considering adding a refreshment area to supply drinks etc to the walkers. He is also thinking of building ramps and other facilities akin to ‘dog agility’ structures, (to make it more interesting for the dogs) and providing agility and basic behaviour training sessions.


The question here is whether there is a granting of a licence to occupy land or the provision of services. The former would be exempt from VAT (subject to an option to tax being exercised), whilst the latter will be taxable.

It is necessary to consider more detail as to the exact nature of, ‘admittance to the field to walk a dog’. In this instance, the dog-walker is given a time slot to enter the field and have exclusive use. There are free ‘poo-bags’ provided and there is a tap where water bowls can be filled. There are no other services provided; the landowner offers nothing else other than the key to the gate. The dog walker has exclusive use of the field for an hour.

A ‘licence to occupy’ may fall short of a formal interest or right over land (e.g. a tenancy agreement) but may still have the characteristics of ‘leasing or letting of immoveable property’ – VATLP05700 refers here

In order for a supply of land to be considered a ‘licence to occupy’, there must be no more than a ‘passive act’ of supplying ‘exclusive use of immoveable property’.  In the circumstances above, the dog walker only gets access to the space but has exclusive access for the time period they are there. The provision of a water supply and the bags would not be seen as removing the passivity of the landowner’s actions; they are factors providing for ‘better enjoyment’ of the use of the field. There is no additional charge and no additional human involvement. The supply as it stands would therefore indeed be a ‘licence to occupy’ and exempt from VAT as per VAT Act 1994 Schedule 9 Group 1.

Changes being considered

If these additional elements were included in a single admission charge, this would change the character of the supply. It would no longer be a passive supply of land. The admission would be to a ‘dog exercising, agility and training facility’. There is potentially additional human involvement as well as the provision of services akin to a designated park or play area. The admission fee is for more than a use of land; it is to use the services available therein. The additional services provided alter the nature of the supply making it a standard rated supply of services to which the use of ‘space’ is incidental.

The key in establishing the liability to VAT of land supplies is to consider

  • Exclusive use
  • Designated area of land/space
  • Passivity of actions by supplier.

The land exemption is currently the subject of review by HMRC and submissions from industry have already been made in response to HMRCs questions regarding the complexity of the exemption and the related Option to Tax regulations. There may be changes in the pipeline, but land remains a very common subject of query.

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