This condition aims to ensure that all licensed premises which sell or supply alcohol for consumption on or off the premises cannot sell or supply alcohol for a price which is less than the permitted price.
Mandatory Condition 11
(1) A relevant person shall ensure that no alcohol is sold or supplied for consumption on or off the premises for a price, which is less than the permitted price.
(2) For the purpose of the condition set out in paragraph 1:
(a) “duty” is to be construed in accordance with the Alcoholic Liquor Duties Act 1979(6).
(b) “permitted price” is the price found by applying the formula:- P = D + (D x V) where:- (i) P is the permitted price, (ii) D is the amount of duty chargeable in relation to the alcohol as if the duty were charged on the date of the sale or supply of the alcohol, and (iii) V is the rate of value added tax chargeable in relation to the alcohol as if the value added tax were charged on the date of the sale or supply of the alcohol.
(c) “relevant person” means, in relation to premises in respect of which there is in force a premises licence:- (i) the holder of the premises licence (ii) the designated premises supervisor (if any) in respect of such a licence, or (iii) the personal licence holder who makes or authorises a supply of alcohol under such a licence.
(d) “relevant person” means, in relation to premises in respect of which there is in force a club premises certificate, any member or officer of the club present on the premises in a capacity which enables the member or officer to prevent the supply in question
and
(e) “value added tax” means value added tax charged in accordance with the Value Added Tax Act 1994(7).
(3) Where the permitted price given by Paragraph (b) of paragraph (2) would (apart from this paragraph) not be a whole number of pennies, the price given by that sub-paragraph shall be taken to be the price actually given by that sub-paragraph rounded up to the nearest penny.
(4) (1) Sub-paragraph (2) applies where the permitted price given by Paragraph (b) of paragraph (2) on a day (“the first day”) would be different from the permitted price on the next day (“the second day”) as a result of a change to the rate of duty or value added tax.(2) The permitted price which would apply on the first day applies to sales or supplies of alcohol which take place before the expiry of the period of 14 days beginning on the second day.
Guidance relating to this condition
Home Office Guidance on the banning of below-cost sales of alcohol in England and Wales, and a duty plus VAT permitted price calculator.
The relevant person should ensure that no alcohol is sold or supplied for consumption on or off the premises for a price which is less than the permitted price. The relevant person could be:
- the holder of the premises licence
- the designated premises supervisor (if any) in respect of such a licence
- the personal licence holder who makes or authorises a supply of alcohol under such a licence
- or any member or officer of a club on the premises that enables the member or officer to prevent the supply in question
The permitted price is defined as the aggregate of the duty chargeable in relation to the alcohol on the date of its sale or supply and the amount of that duty multiplied by a percentage which represents the rate of VAT chargeable in relation to the alcohol on the date of its sale or supply.
If there is a change to the rate of duty or VAT applying to alcohol (for instance, following a budget), the relevant person should ensure that the permitted price reflects the new rates within 14 days of the introduction of the new rate.
You can still sell alcohol using promotions as long as they are compatible with any other licensing condition that may be in force. The relevant person should ensure that the price of the alcohol is not less than the permitted price.