The understanding I have of it is that the licencee must have 'ticked the box', but any additional unamplified music in the presence of no more than 200 people can be added without notifying the licencing authority.

The details and problems of S177 are discussed in detail in the following thread. It is not quite as above.

http://www.mudcat.org/Detail.CFM?messages__Message_ID=1626201

However, it could well be that some LAs are looking at this logically? What is the point of them insisting on entertainment permission for non-amplfied music in the premises that would qualify for S177 - if effectivly they would be unable to impose any conditions upon it?

As a start - it certainly would be a lot more sensible if non-amplified music was exempt altogether from the requirement for licensing permission.