Bars could be fined for at-home cocktails without licence

11th March, 2021 by Nicola Carruthers

UK venues selling pre-mixed cocktails for home consumption without the required licence could be charged, a law firm has warned.

Many bars have ramped up their at-home cocktails offerings

London-based law firm TLT said that businesses need a compounder’s licence from Her Majesty’s Revenue and Customs (HMRC) for the sale of pre-made drinks. There is no charge for applying for the licence.

Without this specific licence, HMRC can impose fines on venues that are offering at-home cocktails.

The warning from TLT comes as many closed on-trade venues offer cocktail delivery services as an additional revenue stream during the pandemic. Furthermore, a number of pre-mixed cocktails brands have entered the market over the last 12 months.

TLT said HMRC defines ‘compounders’ as those who “combine or mix plain spirits or previously compounded spirits with any other substance, except water, so as to distinctly alter the character or flavour of the plain spirits or compounded spirits, producing a new compounded spirit”.

Piers Warne, legal director at TLT, said: “A lot of operators don’t realise they need a compounder’s licence to legally offer this kind of service. It has largely flown under the radar, but with the recent rise in home deliveries of alcohol and specialist cocktail makers looking to supply their creations directly to consumers at home, the genie is well and truly out of the bottle. Remember this does not apply to spirits sold unmixed for mixing at home, only pre-mixed cocktails.

“Operators could be in for a nasty surprise if they are deemed by HMRC to have been too slow to make the application. There is no charge for applying, so subject to complying with the requirements for producing the products in accordance with the law, this is an administrative process only.”

The permit is essential even if a business is making the cocktails at a venue with an alcohol licence, TLT said.

Warne said: “For those who already have a premises licence, they will need to ensure they are permitted to provide off-sales without restrictions that would otherwise prevent this activity. The current temporary Covid deregulation of off-sales, along with the suspension of conditions, will assist the majority of premises licence holders, but it is worth seeking advice to ensure that this applies where otherwise your licence would not allow it.”

HMRC said that those who have not applied for a licence should inform them immediately, and businesses also have the right to appeal any fines.

In addition, the TLT said the compounder’s licence is also needed in Scotland.

Stephen McGowan, partner and head of licensing for Scotland at TLT, explained: “In addition to the HMRC permissions, in Scotland if you are doing home deliveries of cocktails, or any alcohol, this facility should be clearly stated on your premises or occasional licence under the Licensing (Scotland) Act 2005 to avoid any issues with the licensing board. There are also special rules you must observe for home delivery, including keeping records and following age verification processes.”

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