Fiona McKinnon
- Partner
Insights | Commercial Property
Wake-up call: Can I open a restaurant in Scotland?
14 September 2023
Thinking of expanding your business by opening a restaurant in Scotland? Consider the legal requirements before taking the plunge.
Scotland has a separate legal system so it’s important to understand the key differences at the outset.
EXPERT ADVICE
Worry not! Despite the different laws, opening a new restaurant north of the border is achievable, as shown by premium brands doing just that. The key is being prepared.
Lease: Scots Law has no Landlord and Tenant Act, meaning your lease contract governs the landlord/tenant relationship, supported by common law.
In England, each party signs its own lease/disposition, which would be exchanged on completion. In Scotland, contracts for sale or lease are formed by a formal offer by the solicitor for one party and a concluding letter from the other party’s solicitor – known as missives.
This means there is no need for either party to sign paperwork at this stage, even though they are legally bound by missives. Instructing a Scottish lawyer early is therefore essential.
Property tax: Land and Buildings Transaction Tax (LBTT) applies in Scotland – instead of ‘stamp duty land tax’. Your advisors should run an LBTT calculation at the outset and submit an LBTT return to Revenue Scotland on completion of the lease/purchase.
Building Warrants: You apply for a warrant for any fit-out works to the relevant local authority. Scottish local authorities cannot refuse an application as long as it complies with building regulations and legislation. Using an architect with experience in Scotland will ensure that your application is compliant and therefore granted. No work should begin until the warrant is issued.
If you are changing the premise’s use (eg from retail to restaurant) you must submit a planning application for change of use – which the local authority has discretion to refuse.
Tip: Ensure the ‘Date of Entry’ in your lease is only triggered once you have a building warrant, so a fit-out can start straight away and you don’t ‘run down’ a rent free period waiting for the warrant!
Employees: Employment law is the same across the UK. However, if you intend to recruit skilled workers from overseas, consider lawyers to assist with work visas or employment queries. From experience, I know this can cause frustrating delays.
Premises Licence: Scotland has different licensing laws, but the result for you is the same. To sell alcohol you require a premises licence from the local Licensing Board, which includes conditions about where and when you can sell it.
You/Your manager must hold a personal licence to sell alcohol from licensed premises in Scotland, even if you already have one in England. You need to obtain a separate personal licence to be a Designated Premises Manager – ‘DPM’- north of the border. This aspect is frequently overlooked. Helpfully, if the premises have an existing premises licence, this can be transferred to the incoming tenant/ purchaser and a variation of DPM can be submitted along with the transfer application.
If no premises licence is held, then you need to attend a hearing to determine whether one will be granted. This is not a given so expert advice should be sought. We recommend a licensing lawyer should attend to ensure licensing criteria are satisfied.
CHECKLIST
- LBTT: calculate the amount you owe and submit a tax return to Revenue Scotland following the purchase/lease.
- Building Warrant: submit plans to the local authority Building Control Officer in plenty of time.
- Planning change of use (if needed) or consent to fit-out: submit a planning application asap and ensure your contract is conditional upon planning consent being granted.
- Employees: ensure international staff have work visas, and / or personal licence for the DPM.
- Transfer of premise licence: check it and transfer it to your business and make an application for any required variations.
BEWARE!
Delays are guaranteed if you don’t plan ahead. Running into red tape when aiming for a successful opening night can be frustrating.
Issues around visas or licences will push back an opening and choosing to go ahead without them can have repercussions – including closure and removal of your licence.
This article is featured in The Caterer.
If you have questions relating to any of the points raised in this article, please contact Fiona McKinnon.