What to do when a premise licence lapses
Lapsed premises licences can be a major headache for new owners seeking to re-open closed pubs, hotels and restaurants. Generally, you cannot sell alcohol without a premises licence applying to the premises concerned.
A premises licence will immediately lapse and the sale of alcohol must forthwith cease if the holder:
- becomes mentally incapable
- being an individual, becomes insolvent (for example bankrupt or where a voluntary arrangement proposed by him/her is approved)
- being a company, becomes insolvent (for example is dissolved or where a voluntary arrangement proposed by its directors is approved)
- ceases to be entitled to work in the UK.
The risk of a lapsed licence, particularly in the case of closed premises, is very real and unless speedy action is taken to get the premises licence re-instated (see below) the owner will have no alternative but to apply to the local authority for a new premises licence. Such applications, especially contested ones, can be expensive and might ultimately be unsuccessful, even if the premises concerned may have been licensed to sell alcohol for many years.
Where a licence has lapsed, application can be made to the local authority (with notice of the application being given to the police who can object on crime prevention grounds) for an “interim authority”. The application must be made within 28 days of the lapse of the licence and if the interim authority is granted, the premises licence will be reinstated for a maximum of 3 months from the date of the application. Application can be made to the local authority within that 3 months for the transfer of the premises licence. If no such transfer application is made, the premises licence will lapse.
The applicant for an interim authority must have a prescribed interest in the premises (for example the freeholder or the tenant) or be connected with the former holder of the premises licence in certain ways (for example his attorney appointed under an enduring or lasting power of attorney, his insolvency practitioner or personal representative).
You should also be careful to ensure on acquiring licensed premises that the premises licence is not left in the name of any departing operator of the business. If that is overlooked, you might not get to hear about the subsequent insolvency of such operator until long after the 28 day window to apply for an interim authority has expired. A thorough investigation of “the licensing status” of premises before committing to acquire them is absolutely essential.
If you have any questions about a premises licence relating to property you either own or are about to buy or rent, talk to GA Solicitors’ commercial law team. Call 01752 203500 or email me at paul.johnson@GAsolicitors.com.
Paul Johnson, partner