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HMRC internal manual

Business Income Manual

Measuring the profits (particular trades): Licensed houses: grant of licences

The Licensing Act 2003 established a single integrated system for licensing individuals and premises. Each local authority is known as the ‘licensing authority’ and is responsible for licensing alcohol, entertainment and late night refreshment in its geographical area.

The licensing authority is empowered to:

  1. grant new licences
  2. renew existing licences
  3. transfer an existing licence
  4. vary an existing licence
  5. revoke licences

In order to serve alcohol, licences must be held by both an individual (usually the publican) and the premises. Each individual staff member does not need to hold a licence.

Personal licence

To apply for a personal licence, the individual must be over 18 and have a licensing qualification.

Once granted, the personal licence runs for 10 years and can be renewed at the end of that period, although it can be surrendered at any time. The individual can only hold one personal licence at a time.

The licence can be revoked if a licence holder is convicted of a relevant offence or foreign offence, as defined in Sch 4 Licensing Act 2003. The licence can also be revoked if the licensing authority later becomes aware of an undisclosed conviction for such an offence.

Premises licence

The duration of a premises licence is normally unlimited, although the licence holder must pay an annual fee.

The licence can be terminated if:

  • the licence holder dies
  • the licence holder becomes mentally incapacitated
  • the licence holder becomes insolvent
  • the licence holder is dissolved
  • if the licence holder is a club, it ceases to be a recognised club
  • the licence holder surrenders the licence

Any interested party (e.g. neighbours) may apply to the licensing authority for the licence to be reviewed. Following the review, the licensing authority has the power to:

  • amend the conditions of the licence
  • amend the scope of the licence
  • remove the personal licence holder (see above)
  • suspend the licence for a period of up to three months, or
  • revoke the licence

Tax treatment of expenses associated with licensing

For details of the tax treatment of expenses associated with the grant, renewal, transfer or variation of a licence, see BIM61405.