Operators without necessary licence run risk of fine for cocktail deliveries

By Lisa Riley

Published: 11 March, 2021

Operators selling pre-mixed cocktails for home consumption without the necessary licence are at risk of getting fined by the HMRC, UK law firm TLT has warned.

The warning comes as bars, restaurants, pubs and drink brands have increasingly been offering cocktail home deliveries as a way of continuing to trade during the pandemic.

A number of new pre-mixed cocktail brands have also launched over the last year to cater for the homebound consumer.

The law firm said it had found that “many businesses” were selling pre-mixed cocktails for home consumption without the necessary licence – “something that we’ve been speaking to clients about in recent weeks”.

Called a compounder’s licence, HMRC can impose penalties if operators are engaging in these practices without the necessary paperwork, said TLT.

The licence, TLT added, was necessary even if a business is mixing the cocktails at an on-licensed premises, so long as the sale is for customers elsewhere.

“A lot of operators don’t realise they need a compounder’s licence to legally offer this kind of service,” said Piers Warne, legal director at TLT.

“It has largely flown under the radar, but with the recent rise in home deliveries of alcohol and specialist cocktail makers looking to supply to consumers at home, the genie is well and truly out of the bottle.

“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,” he said.

Cocktail makers looking to offer this service would also need a premises licence to sell alcohol, added Warne.

“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,” he said.

According to HMRC, you are a compounder if you “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".

Businesses can apply for the licence, which does not apply to spirits sold unmixed for mixing at home, only pre-mixed cocktails, on the gov.uk website.