Landmark ruling to impact on fees?

Judgement capable of ensuring charges cannot exceed costs

IT’S not very often the bureaucrats in Brussels devise legislation that could actually ease the financial burdens on businesses, but a landmark court judgment based on a little known European Union directive could well have a significant impact on the charging of fees by licensing boards and local authorities.

Application fees and annual premises licence fees are set out in regulations intended to reflect the intention of making the system self-funding. When the figures were first announced (set at levels double those proposed in a consultation) they produced a furious reaction not just from the trade, but also from a number of MSPs.
Patrick Browne, the SBPA’s chief executive, said the Scottish Government had taken “a truly awful decision”, and “totally abandoned any attempt to set fee levels based on any actual costs incurred by boards in processing applications”.

We could see an end to the current rateable value basis.

Justice secretary Kenny MacAskill was dismissive: “The administration takes the view that we are sick and tired of consultations, studies into consultation and consultations on consultations”.
There have since been complaints from trade bodies that the charging basis is unfair and favours the major players, as well as suggestions that some local authorities have amassed considerable surpluses.
One of the fees regulations provides that in setting fees the licensing board must have regard to “the desirability” of ensuring that the total fees payable in respect of any period “are likely to be broadly equivalent to the expenses incurred by that board [and the local council] in administering the Act generally during that period”.
Enter the 2006 European Services Directive. Designed to simplify procedures for businesses wishing to provide services in other EU states, the directive was incorporated into UK law with effect from December 28, 2009.
As a result, applications for “authorisations” (including liquor and other licences required to conduct service activities) must be capable of being lodged electronically. More materially, charges for authorisation schemes “must not exceed the cost of authorisation procedures and formalities”.
That requirement, which trumps the approach taken in the Scottish regulations, has just cost an English local authority an estimated £2 million, including legal costs.
A group of sex shop owners in London’s west end claimed that Westminster City Council had grossly overcharged for licence fees since 2005. Most of the fee income – around 90% – was used to prosecute unlicensed operators. After protracted litigation, the Court of Appeal in London ruled last month that the council will have to hand back the vast majority of fees charged since 2010, with interest on top at 10%.
A review of liquor licensing fees is presently being undertaken on behalf of the Scottish Government by a consultancy firm.
We could see an end to the current rateable value basis or a restructuring of the various bands. There’s also the possibility of a switch to another arrangement, perhaps based on alcohol turnover (no doubt a recipe for an administrative nightmare).
But whatever decision is taken the Westminster judgment is capable of ensuring that charges cannot exceed the costs of the authorisation procedures.
That’s not quite the end of the EU Directive’s implications for Scottish licensing.
It also puts the charging of fees under the Civic Government (Scotland) Act 1982 under the spotlight. Operators of liquor licensed businesses may, in certain circumstances, require to obtain a public entertainment licence or a late-hours catering licence, which in some local authority areas must be applied for annually and generate unwelcome additional costs.
The fees must be “reasonable” and the local authority must “seek to ensure” that the revenue received is sufficient to meet its expenses.
That somewhat wooly wording is also overtaken by the absolute requirement not to produce a profit.

Image – A review of licence fees is underway on behalf of the Scottish Government.