Legal Q&A: Licence and permit renewal, the pitfalls of a CVA

Licence and permit renewal

Q: I run a relatively small public house and the current trading restrictions have had a significant effect on cash flow. While I remain optimistic about future trading, I have annual fees about to fall due for both my premises licence and a licensed premises gaming machine permit. What are the options for me while we are not currently trading?​

A: With regard to your premises licence under the Licensing Act 2003, failure to pay an annual fee may result in suspension of the licence.

While the licensing authority will reinstate a licence once payment has been received, there could be a delay before the authority confirms that you will be able to operate again, particularly if there is surge in payments. You should consider how the timing of a delayed payment could provide further disruption once you are ready to reopen. 

The situation is slightly different for your licensed premises gaming machine permit (LPGMP), which is subject to the Gambling Act 2005. If the fee is not paid, the act requires the authority to cancel the permit unless non-payment is due to an administrative error.

While the legislation requires suspension or cancellation, many authorities have been taking a pragmatic approach to enforcement and the Home Office has encouraged councils to consider a flexible approach.

It would be a worthwhile exercise to contact your local authority to see whether it will accept deferred payment for one or both annual fees.

The pitfalls of a CVA​ 

Q: We own a restaurant and operate the premises under a limited company. Similar to many businesses within the hospitality sector, the current lack of income has forced us to consider the benefits of a company voluntary arrangement (CVA), which may allow us to continue to operate through to better times. If we are able to proceed with a CVA, what is the impact on our premises licence and do we have any options?​

A: In these uncertain times, premises licence holders must consider the impact of insolvency. Any insolvency event, including CVAs, of the premises licence holder would cause a licence issued under the Licensing Act 2003 to immediately lapse.

However, with a little forward thinking and preparation, you can safeguard your premises licence and potentially save your business.

Following the date of the triggering event, in your case the possible CVA, there is a 28-day window in which the licence can be transferred to another solvent entity, be that a company or individual. It is important to note, that if the 28-day period passes without a successful transfer, the premises licence is likely to be irretrievably lost and a new premises licence would be required to enable the premises to continue to trade.

There is, of course, no guarantee a new licence would be obtained upon the same or similar terms and this would depend on many factors such as premises location and cumulative impact policies.

Similar insolvency provisions apply whether the licence holder is a company or an individual, and company insolvency events include the appointment of administrators or an administrative receiver, going into liquidation or the approval of a voluntary arrangement; and for individuals, bankruptcy, approval of a voluntary arrangement or entering into a trust deed for their creditors. 

If it is not possible to find another individual or company to permanently transfer the licence to before or upon the onset of insolvency, certain prescribed persons or an insolvency practitioner may submit an interim authority notice, which allows them to hold the premises licence for a maximum period of three months. During that time, the licence must be transferred to another individual or active company, otherwise the licence lapses permanently.

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