A transfer of premises licence sounds like a fairly straightforward application, and, when dealt with by Gilson Gray’s licensing team, it will be.
A transfer of licence can be done in two ways. Licensing in Scotland is governed by the Licensing (Scotland) Act 2005. The transfer applications come under section 33 and 34, of that Act. This may seem very technical, but it is a necessary starting point.
Section 33 is an application by the current premises licence holder. Section 34 is an application by the incoming licence holder. That distinction is important as the two sections can be used in different circumstances but section 34 has strict time limits.
Where premises which hold a premises licence are being purchased, a section 33 can be preferable, particularly if the seller is also the holder of the premises licence or has control of it. The process under section 33 allows the premises licence holder to control the timing of the transfer. In a sale situation that avoids the transfer being granted before the completion date. This ensures control of the premises licence is in the seller’s hands and at the completion date, avoids any delay in the transfer. It is important that there is no delay to the transfer so the seller is not responsible for a licence they no longer have any interest in or control over.
The seller may not be the premises licence holder but may have a separate licence holding company which is a good group structure for a business. There are advantages to this, particularly if trading in a difficult market place or in a large organisation as this ring fences and protects the licence. If you are considering your structure or who should hold your licence, please get in touch with us on the contact details below and we can advise you on this further.
The section 34 application is where the applicant is the proposed licence holder. This can be applied for where the existing licence holder dies, becomes insolvent or loses capacity and where the business has been sold. There can be some hurdles to this, not least the fact that the application must be lodged within 28 days of any of those things happening. If a premises licence holder becomes insolvent, the licence should be transferred to the insolvency practitioner dealing with their liquidation, administration, bankruptcy or similar. If that is not done within the strict 28 day timescale it can be the case that the licence ceases to exist. That creates an issue for any potential purchaser of the business, for a landlord (as it decreases the value of the premises) and for the IP (as it means value within the administration is lost). If the business is sold and the premises licence is not transferred within the 28 day period, this can create a serious issue, and the licence can be lost.
There is also a question as to whether the business must be trading. There has been a suggestion in the past that for there to be a valid transfer under section 34 the business must continue to trade. That should not necessarily be the case. A public house has a “business” ongoing regardless of whether it has closed during a period or was closed during the period of transfer. The business of that public house, particularly as a public house has a very limited use, is clear to all and the “business” within the public house building generally can be re-opened and revived even if not trading at the time of sale/new lease.
If you are thinking of taking on licensed premises and need a transfer, or if you are a landlord concerned about maintaining your property value and taking on tenants, please contact Jo Millar on firstname.lastname@example.org or 0141 370 8116.