Setting up shop: the lowdown on premises licences

19 September, 2014

The market is recovering and off- trade sales are surging as drinkers forgo the pub in favour of a tipple at home, so now might be a good time to open a new store. But if you are considering this there are various legalities you need to be aware of, one of which is a fundamental asset – the premises licence.

I recently acted for a client who held the lease for a shop in a busy city centre. The client had been trading from these premises for a number of years until an investigation by the licensing authority revealed that the premises licence attached to the shop had expired nearly two years previously.

Unfortunately, when my client took the lease of the shop, his former solicitors failed to ensure that the premises licence was transferred to him or his company. Two years after the lease had been completed the company which assigned the lease to my client and held the premises licence, was dissolved, unknown to my client.

Not surprisingly this news was a shock to my client and consequently the licensing authority notified him that alcohol sales must cease from the shop with immediate effect.

A premises licence will lapse in the event that the holder of the premises licence does one of the following four things: dies, surrenders the premises licence, becomes insolvent or is dissolved.

Within 28 days of one of the above events occurring an application can be made to reinstate the licence. The timescale in my client’s case meant he could not take advantage of this grace period.

Such applications are rarely opposed and the reinstatement of a licence to a third party by the licensing authority is typically far easier and cheaper to administer than an application for a new premises licence.

In my client’s case, I prepared an application for a new premises licence and immediately submitted it to the licensing authority. Despite my client’s long trading record at the shop with no interventions from the police or the licensing authority, a number of objections were made.

Even though the application was on identical terms to the previous licence, the police objected and refused to negotiate – which is a commonplace move to avoid the time and costs incurred by all parties to attend a hearing.

The matter proceeded to a formal hearing and was heard by a panel of local councillors. After listening to submissions by myself and the police, the panel decided to grant my client’s application for a new premises licence.

Ecstatic with the decision, my client was able to trade alcohol at the shop again immediately. However, he was left to wonder why this important issue had not been dealt with by his previous solicitor.

The problems faced above, while financially and practically challenging for my client in the circumstances, could have easily been prevented. To avoid such issues I suggest that those involved with buying, selling or leasing an off-licence bear the following points in mind before entering into any agreement.

INCOMING OPERATORS:

Does the shop have a premises licence?

If so, who is the holder of the premises licence and will they consent to it being transferred to you on completion?

Is the premises licence suitable for your business? Check the hours, activities and conditions attached to the licence prior to completion. An application to vary the licence can be made if the current licence is not sufficient for your purposes.

Do you have an individual lined up to be the designated premises supervisor? Remember that this person must hold a personal licence. Without a DPS in place you cannot sell alcohol at the shop.

OUTGOING OPERATORS:

Does the shop have a premises licence and if so who is the holder?

If you are the holder, does the incoming operator wish to benefit from the existence of the premises licence? If so, will the licence be transferred and to whom?

If the licence is to be transferred ensure you check that the transfer has taken place. Agree a period within which the transfer will be done. Remember that, subject to any agreement you enter to the contrary, you have the option to surrender the premises licence if you are the licence holder. You do not want to become liable for the actions of the incoming operator.

If you or one of your outgoing employees is the DPS, ensure that the incoming operator, along with his or her application to transfer the licence, submits an application to vary the DPS. Your DPS can notify the local authority at any time that he or she is no longer carrying out that role at the shop and from this point the operator must cease to sell alcohol until the position is rectified.

The key to successfully buying, selling or leasing any off-licence is for the parties involved to enter into a constructive dialogue at an early stage about whether the premises licence will lapse, be surrendered or transfer. A new licence will be required after a lapse or surrender. The pressure can be great in these transactions, but licensing is something that you must not overlook. With the correct advice, the processes are by no means insurmountable.

If you believe your shop’s licence may have lapsed, seek advice at the earliest opportunity. The sooner you seek advice, the more likely it is that the issue might be resolved quickly – and at less expense – rather than later.

Edward Smith is a solicitor at McKay Law.




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