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
6 Turnover Based Alcohol Licensing Fee Structure
6.1 This section sets out the key findings in relation to Stakeholder and Licensing Board staff views on a turnover based alcohol licensing fee structure.
Turnover Based Alcohol Licence Fees
6.2 Licensing Board survey respondents were given a series of questions in relation to a turnover based alcohol licence fee structure and were asked to indicate their level of agreement. The responses are shown in Graph 6.1 and discussed in more detail in subsequent paragraphs.
Source: Survey Question 29
6.3 When asked if a turnover based alcohol licensing fee structure would be fair, 28% either agreed (21%) or strongly agreed (7%). (30% agreed current system was fair and 20% disagreed.)
6.4 In relation to the statement 'A turnover based alcohol licensing fee structure would be proportionate across all parts of the sector', 24% either agreed (7%) or strongly agreed (17%).
6.5 When asked if 'A turnover based alcohol licensing fee structure is the most appropriate structure', 21% either agreed (14%) or strongly agreed (7%).
6.6 General queries surrounding a turnover based system raised by stakeholder interviewees included whether it would be turnover by value of total sales, turnover by value of alcohol sales, or turnover by volume of alcohol. One stakeholder suggested that this would create an additional administrative burden on businesses. Others raised queries about how a new business would be charged if it did not yet have trading figures. The difference between 'dry led' and 'wet led' pubs was also raised.
Advantages of a Turnover Based System
6.7 Survey respondents were asked what the advantages of a turnover based alcohol licensing fee structure were. 14 responses were received and these can be summarised in the following themes:
- Clarity and fairness;
- Appropriate and reasonable recovery from premises deriving most benefit from sales, those being most profitable, and those with greatest turnover;
- Greater differentiation between large and small operators;
- More accurately reflects the ability of the trade to meet the necessary fees.
6.8 Positives within the turnover based system were highlighted by stakeholders as: fees would be based on an accurate reflection of sales; and it would be relatively simple to administer.
Disadvantages of a Turnover Based System
6.9 Survey respondents were asked what the disadvantages of a turnover based alcohol licensing fee structure were. 20 responses were received and these can be summarised in the following themes:
- Additional burden in preparing/ checking accounts;
- Potential for movement between bands creating greater administration costs;
- Difficulties in determining the relevant turnover and evidence required;
- Difficulties in challenging inaccurate data;
- Reluctance to disclose commercially sensitive information.
6.10 A number of stakeholders were very nervous about a move to a turnover based system. It was felt that this option would be commercially sensitive and suggested that retailers could not be expected to reveal this information. Others suggested that turnover data would have to be certified by an accountant in order to have a fair and transparent system - this would raise issues of whether Licensing Boards have staff qualified to deal with accounting information.
6.11 Negatives included the possibility of businesses moving between bands on a regular basis with fluctuations in turnover. Questions were raised about additional administrative costs of a turnover based system. Additional comments included that such an option would penalise success, it would be very difficult to police, and an 'industry of avoidance' would develop.
6.12 Reporting timescales and prompt publication of accounts were raised as a potential issue - would delays in publishing accounts lead to delays in fee administration?
6.13 Licensing Board respondents thought that the administrative management of a turnover based system would be a major issue for their Board. One respondent suggested, "This would likely be replacing a sound system which might be further honed by an unworkable system which will consume much of the resources which it was designed to collect."
On Trade Operator with Outlets across Scotland
This company currently has over 300 pubs, and the interviewee believed the biggest issue for the trade to be inconsistencies between different Licensing Boards, of both fees and paperwork/forms. Centralised functions such as Personal Licences would remove the possibility that someone could apply to one Licensing Board, subsequently have the Personal Licence revoked and then apply to another Board and be granted a Personal Licence because that Board would not have knowledge of the first Board having withdrawn the original Licence (although under the current system, the police may bring this to the Board‟s attention). It was believed that there was a need to cut bureaucracy and increase efficiency.
It was thought that the current rateable value based system was working reasonably well. Everyone can access rateable value information and so the system is transparent. There is an appeals system in place if businesses feel their assessment is wrong. However, the interviewee stated that there was a need to amend how the rateable value based system was applied.
A turnover based system was not thought to be viable. There is no system in place to collect turnover data and questions arise over who would manage any such system if it were to be introduced, how manipulation or fraud could be prevented and who would audit the system. The interviewee believed that a turnover based system could potentially penalise growing businesses and businesses suffering a dramatic downturn through no fault of their own (e.g. as a result of the Edinburgh tram works or building repairs).
Turnover does not necessarily reflect profit. The interviewee believed that high volume/low selling-price off sales businesses would be particularly likely to raise that issue. The interviewee thought that a turnover based system taking account only of liquor sales was thought to be fair to everyone across the sector but would be too difficult to implement and open to abuse.
Email: Sacha Rawlence
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