Free Alcohol - No Premises Licence Required
A bar owner has proclaimed that he doesn’t need a licence as he ‘gives alcohol away for free’, rather than sells it.
Simon Atkinson has declared his idea a ‘retail revolution’, which he intends to rapidly expand, growing the ‘Innsatiable’ brand to some 20 outlets in the next two years.
The idea, as I understand it, is that the premises is essentially a furniture shop where alcohol is available for free to customers who are seated, between 12.00 and 23.45. The customers are encouraged to purchase beer mats, for between £2.00 and £3.00.
My interpretation of the business model is that it is loosely based on an ‘honesty bar’, where people determine for themselves what payment they want to make for the ‘services’ provided.
There has been some debate surrounding the claim that Simon Atkinson makes, that what he is doing is not a licensable activity and thus not covered by the Licensing Act 2003; his assumption is that as the alcohol is not being charged for, it does not constitute ‘the retail sale of alcohol’.
Other pubs and bars in the town of Farnham are complaining that he is undermining their work through the local Pubwatch scheme to make the town a safe night-time environment, an argument that Simon strongly refutes.
Innsatiable, he states, takes its responsibilities very seriously, employs door staff to control entry / behaviour, has a state of the art CCTV system and has an almost perfect record since it opened; albeit only having been open for just over a month.
The members of the local Pubwatch have not hidden the fact that they also fear losing business to this newcomer, after all how can they compete with someone giving away free alcohol?
A ‘Retail Revolution’ or a ‘Licensing Revolution’
The arguments being made by both sides are rather contradictory and have led to some confusion.
Simon claims his idea is a ‘retail revolution’; I can only presume that this in reference to his business model rather than his approach to licensing. If it is the business model he refers to as a ‘revolution’ then only time will tell and I wish him well; any attempt to change the status-quo and move business forward should be applauded.
If other local businesses are worried about their slice of the pie because of this innovation, they have to change their own offering to deliver something customers will want more than what Innsatiable is offering.
However if Mr Atkinson believes he has started a ‘licensing revolution’, I fear he is going to be swiftly disappointed; the publicity surrounding Innsatiable this week, will undoubtedly speed up any action that Surrey Police and Waverley Borough Council might have been planning.
When I read the article in the Evening Standard proclaiming that Simon had ‘outwitted the licensing law’ by asking customers to buy beer mats rather than the beer which is ‘free’, it did sound much like a hundred similar arguments I had heard before and discouraged clients from trying.
Mr Atkinson has not found some new loophole in the Licensing Act 2003, the idea is not unique and I would suggest that he seeks some very good legal advice before continuing, let alone expanding his business empire. Alternatively give us a call and we will assist him in applying for a premises licence like we do for so many clients.
Why not just apply for a Premises Licence?
What confuses me is why he just doesn’t apply for a premises licence, by the sound of it, it would not actually be that difficult to do or that expensive. Innsatiable is not operating much outside of the standard hours and if what Mr Atkinson says is true, then he is already controlling his premises to a level which would be acceptable to most licensing authorities in order to promote the licensing objectives.
There may be a few conditions attached to any premises licence he applied for and the longer he delays the more difficult, I fear, it will become for a premises licence to be obtained. Publicity of this nature is not always a positive contributing factor to a new application, it tends to draw more representations out of the public and the responsible authorities may feel obligated to pay the application more attention than usual.
A little more thought would have to go into how to avoid falling foul of the Mandatory Condition of not providing ‘irresponsible promotions’; however this would be a less difficult hurdle, than those I fear he may soon be facing for effectively running an unlicensed ‘drinking den’.
Obtaining a premises licence would not undermine his ‘retail revolution’, if it is the business model Simon believes is the winning formula. Although if the key fact of his popularity is the element of being unlicensed and therefore being seen to be fighting and beating the establishment, then it is not really a ‘retail revolution’, so much as just a revolution.
It is not the business model itself to which I believe the objections will be strongest, but the assertion that the supply for free alcohol does not fall under the Licensing Act 2003.
If I invite friends round and give them an alcoholic drink which I have purchased privately, that is not a licensable activity, however this is the only scenario when alcohol can be given away for free and not be considered licensable.
What Innsatiable is doing by ‘suggesting’ people buy a beer mat or furniture and offering free alcohol as a by-product, even if it is not directly linked to the purchase of these items, is a licensable activity. We refer to it as an ‘in-direct sale of alcohol’, others call it a ‘de-facto sale of alcohol’.
It is a strategy which has been tried and tested by many people, what they have in common is they lost the argument; there is no loophole.
This system is little different from selling tickets which can be redeemed for a drink or selling a hamper which contains a bottle of wine and trying to claim that the wine is free and therefore the sale of the hamper as a whole is not a licensable activity.
A minimum sale price for alcohol is currently not set; this may soon change with the introduction of a minimum price per unit. This means that an alcoholic drink can currently be sold at any price (subject to it not being irresponsible under the mandatory condition), if you choose to give the alcohol away for free, you effectively sell the alcohol at £0.00; but you still sell it.
In the case of Innsatiable, the sale of alcohol (albeit at £0.00) is subsidised by the sale of furniture or beer mats, it is still therefore the in-direct sale of alcohol. The business buys the alcohol and the purchase is recorded in the accounts which show the profit / loss on the sale / supply of alcohol; albeit in-directly through the sale of other items.
The ‘sale of alcohol’ itself is often misunderstood, the Licensing Act 2003 refers to the ‘sale’ and ‘supply’ of alcohol. The ‘sale’ effectively takes place when the alcohol is supplied to the customer, when and if the payment takes place is of less importance.
Take an events company who offer a free bar as part of the package for a Christmas party. They take payment in advance or following the event, but they still have to abide by the times of their premises licence or TEN with respect to the supply of alcohol. This is because when the individual customer is served the alcohol, is the time when the sale / supply is actually taking place.
The penalties for an unauthorised licensable activity such as the one taking place at Innsatiable, is a fine of up to £20,000 and or 6 months imprisonment. The cost of obtaining a premises licence to continue his revolution would be closer to £1000; as our American cousins would say, ‘do the math’.
There is only one reason to continue this particular business in an unlicensed capacity and that is to try and undermine the establishment and generate the equivalent of a cult following or free marketing for the project in that way. Simon already says he pays rates, vat, tax and looks forward to employing many staff all of whom will contribute to the economy; so why try and by-pass the Licensing Act 2003, what advantage does that bring?
I wish Innsatiable good luck with their business venture, innovation is great and must be encouraged, it drives competition and delivers great customer experiences. However there are some things which can not be ignored, the supply of this controlled drug (alcohol) is a licensable activity and he should fight his retail revolution within the law.
Revolutions are those fights which successfully change the status-quo, until such time as that success is achieved and Innsatiable transforms the way we retail alcohol, this is a ‘retail experiment’. If Innsatiable and Simon Atkinson do not conform with licensing law quickly, the experiment may well be unsuccessful based on procedural failures rather than the merits of the business ideals themselves.
- Drinks are on the house at this pub – Evening Standard
- Pub Landlords Slam “unlicensed bar” selling “free” alcohol in Farnham Surrey – The Morning Advertiser
Author - Peter Mayhew is the Managing Director of Beyond the Blue Training & Consultancy. He delivers training courses and provides expert opinion on alcohol & entertainment licensing, health & safety, drug awareness and providing solutions to workplace violence through conflict resolution for individuals, organisations and public bodies. Peter is a frequent contributor to industry publications.
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