A ban on the sale of alcohol below cost, defined as duty plus VAT, came into force on May 28 2014.
The new licensing condition, which is part of the Mandatory Code of Practice, sets the minimum price beneath which no alcohol product will be permitted to be sold. The Mandatory Code of Practice applies to all licensed premises in England and Wales. Any breach of this condition will be a breach of a retailers’ licence and can be enforced by the local licensing authority.
The level of duty plus VAT is calculated by taking the relevant excise duty figure for a particular product and then applying the current rate of VAT to this amount. The Home Office has created a duty plus VAT permitted price calculator which can be found here and will assist you in calculating the ‘permitted price' in order to avoid any breach of the law.
Further guidance on how to ensure compliance with the new condition is available on the Home Office’s website here.
