Legal Q&A | Scottish Licensed Trade News

Scottish Licensed Trade News

Legal Q&A

Jack Cummins is one of Scotland’s leading licensing lawyers. Every month he writes on licensing law and answers readers’ questions in SLTN.

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MUP

MUP has thrown up plenty of questions since it came into force last month. In this special column, Jack Cummins tackles some of them

Money-off vouchers
Q: I regularly shop at a branch of a national food chain that periodically issues money-off vouchers. Typically, the saving is £5 on a shop of at least £30. Until recently, alcoholic products weren’t excluded. On my last shop I was told by the checkout operator that I couldn’t use the voucher because I was buying some wine. I’m assuming this must have something to do with minimum pricing, but my drinks purchases are usually priced well above the minimum. Can you explain the reason for the restriction?

A: According to the guidance issue by the Scottish Government, there’s nothing to stop the continued use of these vouchers. The saving is applied to the total cost of the shopping but it mustn’t take the cost of the alcohol below the minimum price. If, for example, you were buying a bottle of champagne priced at £20, the minimum price would be £4.69 (based on an ABV of 12.5%). So, clearly, the saving would be completely legal – but, in many cases the price would be reduced below the legal minimum.

Perhaps this could be addressed by some sort of IT “fix” so that the till system checks the value of the voucher against the minimum price of alcohol purchases and allows or blocks its use. But I suspect this retailer – along with others – has taken a risk-averse view. You could of course use the voucher by splitting the alcohol and food into two separate transactions, provided that the food spend still matched the threshold amount. That would certainly please those who are constantly arguing for alcohol to be checked out separately – but I suspect most shoppers would just view this as a total nuisance.

Tastings

Q: How does MUP affect tastings as part of a distillery tour?

A: These tastings are addressed in the Scottish Government guidance. In my view, it’s wrong. The relevant paragraph starts with the proposition that “Minimum pricing applies to the sale of alcohol”. That’s perfectly correct, of course. But Section 3 of the Licensing (Scotland) Act 2005 provides that alcohol is treated as “sold” where it’s supplied as part of a contract. So, if there’s a charge for the tour, and alcohol is provided, it’s wrong to say – as the guidance does – that minimum pricing doesn’t apply to free samples “as there’s no sale of alcohol”. In fact, the cost of the tour must be at least equal to the minimum price of the samples. There’s another important dimension to this. Anyone operating these tours and providing tastings must have a licence for the premises if the tour carries a charge, even if the samples are ‘free’.

Free soft drinks

Q: I’ve read that some small shops might be offering free bottles of soft drinks with alcohol purchases to offset the impact of minimum pricing on their customers. Can they do this?

A: The 2005 Licensing Act provides that a promotion is ‘irresponsible’ if it involves the supply of an alcoholic drink free of charge, or at a reduced price, on the purchase of one or more drinks (which need not be alcoholic). But there’s nothing to prevent the supply of a free non-alcoholic drink on the purchase of an alcoholic product, provided the minimum price is met.


Online purchases

Q: What’s the position where a retailer takes an alcohol order online from its headquarters in England but sends the purchases from a warehouse in Scotland?

A: Minimum pricing applies to that sort of transaction. Where an online order is fulfilled by the dispatch of the goods from premises in Scotland, those premises must be licensed and the licence will have the minimum pricing condition attached. On the other hand, if the goods are sent from England, there’s no price restriction and nothing to prevent a ‘click and collect’ arrangement so that the alcohol can be picked up from premises in Scotland. Since there’s no sale at the point of collection, those premises needn’t be licensed. However, if they are licensed the alcohol must be taken away during licensed hours. There’s also nothing to prevent Scottish retailers heading over the border and filling a van with supermarket purchases for re-sale in Scotland – provided, of course, that the retailer holds a licence.


Arithmetic

Q: I’ve been trying to work out how to apply the minimum pricing formula to products but it’s leading to bizarre results. Can you please clarify the methodology?

A: The condition attached to premises licences sets out how the minimum price is to be calculated. The formula is: MUP x S x V x 100, where MUP is the minimum unit price; S is the strength of the alcohol; and V is the volume in litres. You need to put decimal points in the right places. So, taking the example of a bottle of wine with a strength of 12.5% and containing 75cl, the correct calculation is as follows: 0.5 x .125 x .75 x 100 = £4.687. That figure needs to be rounded up to £4.69. You should not rely on the number of units where that’s given on labelling. As far as multi-packs are concerned, it’s important to bear in mind that so-called ‘linear pricing’ still applies if any of the pack components are sold individually.


Meal deals

Q: Does minimum pricing impact on ‘meal deal’ offers?

A: Where a meal and alcohol are sold for a combined price, that price must not be less than the minimum price of the alcohol if it was sold on its own. So, if a pub offers a meal and a bottle of house wine (75cl, 12.5% ABV) the cost of the package cannot be less than £4.79.


Brand match and reward points

Q: I work for a multiple retailer with outlets on both sides of the border. While there’s no minimum pricing in England and Wales, there is a ban on selling ‘below cost plus duty and VAT’. That’s called the ‘permitted price’. I’m aware that the ‘below cost’ guidance issued by the Home Office specifically approves of the use of ‘brand match’ coupons where the coupon would take the price of alcohol below the ‘permitted price’. Does the same approach apply to minimum pricing? What about reward points?

A: While the Scottish Government guidance follows the Home Office guidance in large measure, it takes an opposite approach to ‘brand match’ schemes. The Home Office treats the coupons as “a form of refund for overpaying” and they can result in alcohol being sold below the ‘permitted price’. That’s an odd analysis. If I make a purchase that would have been cheaper elsewhere, I wouldn’t consider myself to have been “overcharged”. So, correctly in my opinion, the Scottish approach is to allow the use of ‘brand match’ coupons for an alcohol purchase but only provided it doesn’t result in the price being reduced below the minimum price. On both sides of the border, the same approach is taken in relation to points accumulated on a reward card. The cash value of the points can be used for an alcohol purchase provided that the value of the points redeemed (plus any cash top-up) is not below the minimum price of the product. But the reward points must have been earned in a previous transaction. Those awarded during a particular transaction only have a cash value in relation to future purchases: they are not instantly redeemable.

2018

Q: Could you tell me, is it legal in a golf club to offer ‘buy two, get one free’ on alcohol, and offer on certain days a reduced price on drink?

A: The multibuy offer is classed as an “irresponsible promotion” that would breach a condition of the premises licence and also amount to a criminal offence. Price reductions are permissible, but they must start at the beginning of a period of licensed hours and run for a minimum of 72 hours. In the case of alcohol sold for on-consumption, no further price variations, of any product, may be introduced during that period.

Q: I have hired a bowling club for a private function. It’s due to start at 7pm and end at midnight. I have family travelling from England and different parts of Scotland. When I made the booking I was told it was okay to have children at the party. Now I have been told the children need to leave at 9pm. Can I pay for a special licence so the children can stay until 11pm? It is not worth family travelling a long distance to only be there for two hours.

A: The 9pm watershed will be set out in the club’s premises licence. I’m afraid there’s no “special licence” solution. In order to extend the time for children’s access, the club would have to apply to the local licensing board for a major variation of the licence. That process could take several months with no guarantee of success. Since the club didn’t tell you about the restriction at the time of booking, I reckon you might want to consult a solicitor about a compensation claim.

Q: My restaurant’s licensed hours start at 12 noon. Can I supply aperitifs before that time and take payment later by adding the cost to the customers’ bills?

A: No. Allowing the consumption of alcohol outwith licensed hours is an offence, even when no money has changed hands.

Q: What can I do about a person bringing their own soft drink onto my licensed premises?

A: There’s nothing to prevent you refusing service.

Q: Would I need a licence to operate an honesty bar in my bed and breakfast establishment?

A: Yes. You require a licence if you sell alcohol, provide it in the expectation of payment or offer it as part of a paid-for package (even if the alcohol is ostensibly free of charge).

Q: Is it correct that spirits have to be all displayed in one continuous area in an off-licence? The only second area being permitted is behind the sales counter or in a separate kiosk – you cannot have a separate bay or area for special offers? I certainly was told this when setting up a shop. Does this still apply as I can’t find it anywhere in my training manual or through online research?

A: That’s basically correct. In convenience stores, supermarkets and specialist off-sales shops, alcohol (not just spirits, of course) can only be displayed in one or both of: (a) a single public area; and (b) an area to which the public have no access (typically, behind a service counter where high-value items are kept). These areas are shown on the licence layout plan. The public area doesn’t need to be “continuous” as such. So, in convenience stores and supermarkets you might find two or more aisles with rows of alcohol shelving and perhaps end-of-shelf displays. In specialist shops (Majestic, Oddbins and the like) the whole sales floor will – quite legitimately – be given over to the display of alcohol on shelves and plinths. As I’ve repeatedly said on this page finding the up-to-date version of the Licensing (Scotland) Act 2005 is a real challenge; but more information on the rules regulating display areas is available at legislation.gov.uk

Q: I am about to start a skippered charter business based at a Scottish port and offering day trips for tourists. These will be catered in the form of lunch and afternoon tea but can I advertise complimentary alcohol or would I need a licence to do this? Is a sailing vessel covered under licensing laws?

A: The supply of alcohol on a complimentary basis as part of a paid-for package constitutes a sale for which a licence is required. Generally, the Licensing (Scotland) Act 2005 requires a vessel to be licensed. However, in certain circumstances, they are treated as “exempt premises”: where the vessel is engaged on (a) an international journey, or (b) another type of journey forming part of a ferry service. Your proposition doesn’t fit into either of these categories, but I suspect you would be able to take advantage of a dispensation for small vessels. A licence is not required while there are no more than 50 persons on board and the vessel is not moored or berthed. It’s important to be aware that a substantial number of offences contained in the 2005 Act would still apply: for example, alcohol cannot be sold to a person under 18. Curiously, where a passenger behaves in a disorderly manner and “fails to leave the premises”, he can be removed by the use of “reasonable force”. How that might easily be carried out is not obvious – assuming that he or she is not made to walk the plank.

Q: A member of my restaurant staff decided to placate customers who had to wait a very long time for a pre-booked table by giving the group a free bottle of house wine. Was that allowed?

A: As I’ve said on this page a number of times, there is no absolute ban on giving away alcohol. In the circumstances you describe, the supply of the wine wasn’t linked to an alcohol purchase, so it was perfectly legal.

Q: My friend operates a public house near a major football stadium and was told by the police that on match days he has to operate a “members only” policy. Where does he stand if he refuses to comply? A public house is obviously quite different from a members’ club.

A: There must be a misunderstanding here and I’d advise your friend to speak to the local licensing police to get clarification. As you say, there’s no question of a public house having a membership scheme. At a guess, I suppose it’s just conceivable the police may have suggested that on match days a door policy is operated so that entry is restricted to regular customers – but that’s clearly problematic.

Q: Can I hold a competition in a private members’ club and give out prize money or drinks vouchers to a non-member?

A: The status of the person receiving the prize – member or non-member – is irrelevant. There’s no obstacle to prize money; but on any licensed premises, offering alcohol “as a reward or prize” is considered to be an “irresponsible promotion”, unless the alcohol is in a sealed container and consumed off the premises.

Q: I have a B&B establishment in a tourist area and I have been thinking of placing a small decanter of whisky and glasses in the guests’ bedrooms as a welcome drink. Do I need an alcohol licence to do this as I am offering it for free and not selling it as an extra? Or what about Prosecco in the room on, say, Valentine’s Day as an extra?

A: You can’t supply alcohol free of charge without a licence where the supply is linked to a paid-for service such as accommodation. So, the short answer is: you need a licence for either of these offers.

Q: I was in a pub with my father and nephew before a football match. I was asked to take my nephew through to the lounge where he hears the same colourful language and the clientele is pretty much identical to the public bar. The boy is 14 years old and usually has a soft drink. Sometimes the lounge is bursting at the seams with people with no kids. Why do we have to go through to the lounge? I asked the bar staff but they weren’t helpful.

A: It’s virtually certain this arrangement is in place because the operating plan in the pub’s premises licence restricts access by under 18s to the lounge bar – for whatever reason – so the operator is simply complying with the law.

Q: I’m looking for advice on off-licence regulations within a public house. Are customers able to purchase alcohol within the establishment before 10.45pm, stay until closing and leave with the alcohol purchased?

A: Licensed hours for off-sales – whether in a pub, supermarket or shop – cannot extend beyond 10pm. (That’s the usual terminal hour but it’s possible that the operating plan may contain an earlier time.) In all cases, off-sale purchases must be completed by the end of licensed hours and must be taken from the premises within 15 minutes thereafter; they cannot be removed in an open container. So, assuming a terminal off-sales hour of 10pm, the alcohol must be off the premises by 10.15pm.

Q: Can a hair salon give away free wine to customers getting their hair cut or do they need a licence to do this?

A: The salon would need a licence. The supply of wine in these circumstances is treated as a ‘sale’ because the customer acquires a right to the alcohol under the contract to have his or her hair cut.

*Jack Cummins is unable to enter into personal correspondence on readers’ questions. The advice offered in SLTN is published for information only. No responsibility for loss occasioned by persons acting or refraining from action as a result of material contained on this page or elsewhere in SLTN can be accepted by the author or publisher.