Although figures revealed last year indicated that the number of pub closures had fallen, more recent data suggests that the restaurant sector is now at greater risk of insolvency due to Brexit.
This is due to rising costs which has resulted in the stagnation of disposable income (accountants Moore Stephens, for example, warned of this at the end of last year). The pub sector is certainly not out of the woods yet either: CAMRA called this week for new business rate relief to assist pubs (see CAMRA press release).
Against this backdrop, Insolvency Practitioners (IPs) would be well advised to keep up-to-date with some recent changes to licensing laws, which may impact upon how they deal with the insolvency of a business licensed for the sale/supply of alcohol, regulated entertainment (including music, dance, films, plays, boxing and indoor sports) and/or late night refreshment (hot food/hot drink after 11pm or before 5am).
Immigration Act 2016
A number of changes to the licensing regime were introduced on 6 April 2017 under the Immigration Act. IPs should be aware of the changes so they can ensure that any applications they submit for interim authority and/or transfer of a premises licence are valid – because the right to work status of an individual licence holder (premises or personal) can affect the validity of a licence (and therefore whether the IP can lawfully trade under the licence while looking for a buyer). The key practical changes are:
- Licence application forms for interim authority notifications, transfers, new premises licences, personal licences and Designated Premises Supervisor (DPS) changes have all been amended. If you submit an application on an incorrect form, it is likely that the application will be rejected as invalid (which will cause difficulties if it is close to the 28-day window for an interim authority or the 3-month window for transfer following an interim authority) so make sure you don’t use out of date ‘templates’.
- Individual licence applicants are required to provide proof of their right to work in the UK and disclose their nationality and place of birth (acceptable documents include a British passport or current biometric immigration document). These changes are likely to be of particular interest to IPs applying for a personal licence.
- A personal licence ceases to have effect if the holder is no longer entitled to work in the UK. This change will interrupt the ability of the IP to trade a premises licensed for the sale of alcohol if the named DPS loses their right to work, because it is a mandatory condition of every premises licence that if the personal licence of the DPS lapses, no sale of alcohol can be made. IPs should ensure that they take stock of all personal licence holders in a business as soon as possible so that they can identify a replacement DPS quickly if this happens.
Policing and Crime Act 2017
The Policing and Crime Act 2017 also came into force on 6 April 2017 and contains specific provisions dealing with alcohol and late night refreshment. The provisions allow licensing authorities to revoke or suspend personal licences when the holder is convicted of a ‘relevant offence’. The power also applies where the licensing authority learns that the personal licence holder has been required to pay an immigration penalty at any time before or after the grant of the licence. Where the personal licence of a DPS is revoked, again, no sale of alcohol can be made under the premises licence. Therefore, IPs should be aware that continuity of trade will be at risk if an individual licence holder is so convicted (or required to pay an immigration penalty).
Alcohol Wholesaler Registration Scheme (AWRS)
The AWRS came fully into force on 1 April 2017. Although the scheme is separate to the licensing regime, IPs dealing with licensed premises should be aware that all alcohol retailers are required to ensure the UK wholesalers who supply them are approved under the Scheme (there is a register of wholesalers, available online via gov.uk to those registered). It is an offence to buy alcohol from a UK wholesaler who is not approved under the Scheme.
In addition, if an IP is appointed in relation to a business which supplies alcohol to another business (for example as a wholesaler or retail business supplying alcohol to a franchisee), in all likelihood that business should be registered under AWRS.