What is a premises licence under the Licensing Act 2003?
A premises licence is granted by your local licensing authority under the Licensing Act 2003. It authorises specific licensable activities at a specific address — most commonly the sale of alcohol by retail. The licence is tied to the premises, not the company. When you close the business, you have three options: surrender the licence, transfer it to a new operator, or allow it to lapse through non-renewal. Only formal surrender removes the licence from the register immediately.
How to Handle a Premises Licence When Closing a Business
When you close a hospitality or retail business in England or Wales, the premises licence does not disappear automatically in the same way as your day-to-day trading. What you do with it depends on whether you are shutting the business, selling the site, transferring the operation to someone else, or closing the company that holds the licence.
For SMEs, the main point is simple: deal with the licence before the closure is completed. If the company that holds the licence is dissolved or becomes insolvent, the licence lapses under the Licensing Act 2003, and you may only have a short window to restore it.
When a premises licence matters
A premises licence is required for permanent licensable activities such as the sale of alcohol, regulated entertainment, and late night refreshment. In practice, this is most relevant for pubs, restaurants, bars, cafés, takeaways, hotels, and venues that host entertainment or late-night food sales.
If your business stops trading, the licence may still exist in law unless you surrender it or it lapses because the holder no longer exists or no longer qualifies to hold it. That means a closure plan should include a licensing check, not just company closure, lease termination, and HMRC issues.
Your three main options
There are three common routes when closing a licensed business: surrender the licence, transfer it to a new operator, or let it lapse where the holder ceases to exist or another trigger applies.
- Surrender the licence if the business is closing and no one will continue licensable activities at the premises.
- Transfer the licence if another person or company will take over the premises and continue licensed trading.
- Allow it to lapse only if the licence holder ceases to exist or becomes disqualified, and you are not preserving the licence through the statutory reinstatement route.
If the company is being closed
If the licence is held by a company and that company is dissolved or enters insolvency, the licence lapses under section 27 of the Licensing Act 2003. For a company, insolvency includes the approval of a voluntary arrangement, the appointment of an administrator or administrative receiver, or going into liquidation.
This is why directors should not leave licensing decisions until the end of the strike-off or liquidation process. If the company disappears before action is taken, you may lose the licence unless you use the statutory reinstatement route in time.
The 28-day rule
If a premises licence has lapsed because of insolvency, dissolution, death, incapacity, or a similar trigger, an eligible person can apply to transfer the licence within 28 days after the day it lapsed. If that application is made in time, the licence is reinstated from the moment the licensing authority receives the application.
This is a critical deadline. Miss it, and the licence lapses again or is lost permanently for practical purposes, meaning you may need to apply for a new premises licence if the premises is to trade again. Only one application can be made in reliance on this reinstatement mechanism.
Transfer versus surrender
A transfer is appropriate when the business or premises will continue under a different operator. GOV.UK confirms that premises licence transfer forms are available, and the transfer route is the normal way to change licence holder where trading continues. In a closure context, this often applies when the premises are sold as a going concern or the landlord takes over the trading entity.
Surrender is appropriate where nobody will continue the licensed activities. In that case, keeping the licence active creates unnecessary compliance risk, including annual fees and the possibility of confusion over who is responsible for the premises.
DPS and alcohol sales
If the licence authorises alcohol sales, the premises normally must have a designated premises supervisor, and that person must hold a personal licence. The main exception is community premises that have successfully applied to waive the DPS requirement.
If you are closing the business entirely, make sure the DPS arrangement is wound down as part of the closure plan. If the licence is being transferred, the new operator will usually need to sort the DPS arrangement as well before trading in practice can continue.
Closure checklist
Before you shut the doors, take these steps:
- Confirm who holds the licence and whether that person or company will still exist after closure.
- Decide whether the licence should be surrendered, transferred, or preserved through a reinstatement route.
- If the company may be dissolved or become insolvent, act early so the 28-day deadline is not missed.
- Check whether alcohol sales require a DPS, and whether the current DPS appointment should end or be changed.
- Speak to the local licensing authority if timing is tight or the site may reopen under a new operator.
Common mistakes
The most common mistake is assuming the licence is automatically “covered” by the lease or by the sale of the business. In reality, the licensing position is separate and must be handled on its own. Another mistake is leaving the licence with a dissolved company and discovering too late that the 28-day reinstatement window has passed.
It is also easy to overlook the DPS requirement for alcohol premises. If the premises is meant to reopen under new management, the premises licence, transfer, and DPS steps should be planned together rather than as separate afterthoughts.
When to get advice
You should get licensing advice early if the business is insolvent, the company is being struck off, the premises are being sold, or the new operator wants to trade immediately after completion. The practical risk is a gap in lawful trading: once the licence lapses or is surrendered, licensable activities cannot continue unless a valid licence arrangement is in place.
For restaurants and other hospitality businesses, the safest approach is to treat the premises licence as a closing item on the same level as payroll, leases, VAT, and final accounts. That keeps the closure clean and reduces the risk of an avoidable licensing problem.