Review of Alcohol Licensing Fees

The aim of the research was to evaluate the current alcohol licensing fees regime and consider the efficacy of other potential structures to inform the Scottish Government’s proposed reform of the fees regime

3 Legislative Review

3.1 The legislation that provides the framework for the licensing fee regime in Scotland is:

  • The Licensing (Scotland) Act 2005;
  • The Licensing (Fees) (Scotland) Regulations 2007.

3.2 This section sets out the key points from the legislation and discusses important issues in relation to the current and future Alcohol Licensing Fee Structure.

Licensing (Scotland) Act 2005

3.3 The Licensing (Scotland) Act 2005 received Royal Assent on 21st December 2005. The Act made provisions for the regulation of the sale of alcohol, and licensed premises and other premises from which alcohol is sold.

3.4 Licensing Boards are in place for each local authority, and in some cases there are separate Boards for subdivisions of a local authority. Boards must publish a Licensing Policy Statement to meet the requirements of the Act. The Licensing Boards have a duty to assess an overprovision of licensed premises in their area and also to keep a register of information relating to premises licences, personal licences and occasional licences issued by the Board. They must also maintain a record of decisions made in relation to applications and other Board decisions relating to licences.

3.5 The Act required that Local Licensing Forums be established and meet at least annually to keep under review the operation of the Act and functions of the Board locally. Each Council must also appoint a Licensing Standard Officer whose role is to provide information and guidance on the operation of the Act and to supervise premises and occasional licence holders' compliance with the Act.

3.6 In appointing members of a Forum, the relevant council must seek to ensure so far as possible that the membership of the Forum is representative of the interests of persons who have an interest that is relevant to the Forum's general functions, such as:

  • holders of premises licences and personal licences;
  • the chief constable for the police area in which the Forum's area is situated;
  • persons having functions relating to health, education or social work;
  • young people;
  • persons resident within the Forum's area.

3.7 The Act described the variety of licences covered by the Act that may be issued by Licensing Boards, these are:

  • Premises Licences - a licence issued by a Licensing Board under section 26(1) or 47(2) authorising the sale of alcohol on the premises;
  • Occasional Licences - a licence issued to the holder of a premises licence, the holder of a personal licence, or a representative of any voluntary organisation ... in relation to any premises (other than licensed premises) ... authorising the sale of alcohol on the premises;
  • Personal Licences - a licence authorising the individual to supervise or authorise the sale of alcohol

3.8 The Act also stated that Scottish Ministers may by regulation make provision for the fees to be charged in respect of these licences. These regulations are contained in Statutory Instrument No. 553 Licensing (Fees) (Scotland) Regulations 2007 as described below.

The Licensing (Fees) (Scotland) Regulations 2007 - Scottish Statutory Instruments No. 553

3.9 The Licensing (Fees) (Scotland) Regulations 2007 provided that licensing fees should be determined by the rateable value of the premises. The regulations set out six categories with a separate category for: premises with no rateable value, visitor attractions and clubs, and where the main function of the premises is to provide accommodation.

3.10 The first time a premises applies for a licence, a fee is applicable. Where a licence is in effect, the holder is required to pay an annual fee in respect of that licence. The annual fee payable is determined by the Licensing Board but must not exceed limits set out in the 2007 Regulations. Where a Board charges less than the maximum set out in the Regulations, each fee must be reduced by the same percentage. Each Board should publish appropriate details of fees in their area. The current fee structure is set out in Table 3.1.

Table 3.1 Current Alcohol Licensing Fee Structure

Category of Licence Application Fee Annual Fee
Maximum Maximum
Category 1 - not entered on valuation roll, no rateable value, nil rateable value, visitor attractions, clubs, provision of accommodation only £200 £180
Category 2 - Rateable Value between £1 and £11,500 £800 £220
Category 3 - Rateable Value between £11,501 and £35,000 £1,100 £280
Category 4 - Rateable Value between £35,001 and £70,000 £1,300 £500
Category 5 - Rateable Value between £70,001 and £140,000 £1,700 £700
Category 6 - Rateable Value over £140,000 £2,000 £900
Application to vary premises Licence under 31 (1) £31 N/a
Application to vary premises Licence - minor variation £20 N/a
Occasional Licence £10 N/a
Extended Hours Licence £10 N/a
Personal Licence £50 N/a

Rateable Values

3.11 Alcohol licensing fees are based on a properties' rateable vale. However not all licensed premises have their rateable values calculated in the same manner, for example some are based on a businesses' turnover whereas others are based on application of the comparative principle.

3.12 The following Practice Notes set out some of these bases of valuation and highlight the differences between the on trade and retail off trade.

Scottish Assessors Association - Revaluation 2010, Commercial Properties Committee, Practice Notes

Practice Note 16 Hotels

3.13 This Practice Note dealt with the valuation of all classes of Hotels and Country Inns by application of the comparative principle applying percentages to the hypothetical achievable turnover for the main elements of the hotel operation.

Practice Note 17 Valuation of Licensed Premises

3.14 This Practice Note dealt with the valuation of licensed premises with the character of Public Houses, Licensed Restaurants and Nightclubs by application of the comparative principle applying percentages of turnover to the adjusted hypothetical achievable turnover.

Practice Note 40 Valuation of Shops

3.15 This practice note applied to the valuation of standard shops and subjects occupying shop type premises in retail locations by application of the comparative principle using rates/m2 derived from local rental evidence.

Practice Note 13 Valuation of Supermarkets and Superstores

3.16 This Practice Note provided guidance with regard to Supermarkets and Superstores by application of the comparative principle using rates/m2 derived from the rentals of units of a similar size, character and location.

Review of the Licensing (Scotland) Act 2005 - Regulatory Review Group (June 2010)

3.17 The RRG undertook a review of the Licensing (Scotland) Act 2005 to consider the implementation of the legislation, its impact on business, the principles of regulation, and unintended consequences. The RRG recognised that the Act and elements of subordinate legislation were not operating as intended. The main causes for concern fell into three main categories:

  • Fees and the cost of applications;
  • Application paperwork and processes;
  • Review and monitoring.

3.18 The recommendations of the RRG in relation to fees and the cost of applications were:

  • The Scottish Government should review whether rateable value is the best scaling factor for the banding structure used for calculating licensing fees for licensed premises;
  • Councils should develop a transparent system which allows an examination of the cost of running the Licensing Board and services;
  • A high level Alcohol and Licensing Forum should be reintroduced to look at the more strategic and longer term issues around fees, etc.;
  • There should be more consistency and transparency in issues around full cost recovery.


Email: Sacha Rawlence

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