Transferring stock ownership is a meticulous process, demanding attention to detail. From scrutinising cost prices to assessing shelf life, the process requires precision and clarity. This guide outlines essential considerations and procedural nuances for a seamless transition process, empowering the stakeholders to navigate stock valuation and sale with confidence. Sufficient time should be allowed for drafting a formal written agreement if necessary. While these recommendations serve as guidelines, it's essential to consider any clauses specified in the sales contract.

Liquor Stock

Cost Prices
The outgoing licensee should provide written proof of cost prices for the previous four weeks’ stock purchases, with invoices showing these prices. If unavailable, the outgoing licensee should authorise suppliers to provide copy invoices. This establishes the correct value of the stock on hand. Slow-moving stock delivered more than four weeks ago should be valued at an estimated fair market value or lower, agreed upon by the stock auditors for both parties. If assurances of actual costs cannot be obtained, the maximum discount should be applied to the cost value paid for the goods. Unless it can be proven that any goods were supplied free of charge, all stock should be valued at market value.

Shelf Life
The outgoing licensee is responsible for removing out-of-date stock from sale. Stock items that have exceeded their sell-by date should not be included in stock. Items past their best-before date should be disregarded unless both parties agree it is in acceptable condition, in which case a heavily discounted rate may be applied. Short-dated stock, defined as unlikely to be sold within its shelf-life, may be discounted if agreed upon. Stock not included in the valuation should be moved to a designated area and identified as the outgoing licensee’s property for removal.

Stockholding in Excess of Requirements
The outgoing licensee must prove that high levels of stockholding can be sold before expiring. Stock without a designated shelf-life may be subject to agreement between the outgoing and ingoing licensee.

Certification
The stock auditor should provide a certificate of valuation. If one auditor acts for both parties, an itemised report showing quantities and cost prices should be supplied on site. If two auditors agree on counts, costs, and final figures, an itemised report may not be necessary.

Cellar Gas Supplies
Cellar gas should only be included in the valuation if agreed in advance. The rental company or supplier should be present on the changeover day to accept the stock count of rental cylinders and remove empties. Only gas currently in use should be included, and full unopened cylinders may be valued at market value if agreed upon. Excessive cellar gas cylinder stockholding should follow the guidelines for general stock excess.

Quality and Percentage Volume of Alcoholic Beverages
The outgoing licensee must guarantee that all stock meets the required alcohol percentage and has not been tampered with. Hydrometer tests may be conducted on large quantities of open spirits. Claims regarding purity should be dealt with at the time of valuation, with no post-valuation claims considered. The suitability of storage should be assessed, especially for cask ale, wine, minerals, cigars, and snacks. Stock below acceptable standards may be discounted or excluded. Stock found to be duty-free should be removed by the outgoing licensee. Post-January 2007, bottles must carry a duty stamp.

Fine Wine
The outgoing licensee should provide invoices for wine purchases. Wine purchased for investment should be valued at full market replacement value or insurance value, with the option for the outgoing licensee to remove such wines prior to changeover. Independent expert opinions may be required for high-value wine valuations. Vintages should be checked for correct valuation, preventing “cherry-picking” by the ingoing licensee. Storage suitability should be considered, with any unacceptable stock treated as per general storage guidelines. Damaged labels may warrant discounts based on the wine’s original price. Bottles with missing labels should not be valued. Wines bought “en primeur” should be valued based on original cost with applicable uplifts, considering exchange rates, freight, insurance, duty, and VAT. Wines in the UK under Bond require a certificate of ownership from the bonded warehouse.

Food Stock

Agreement should be reached prior to completion on whether food stocks are to be maintained, run down, or exhausted. Stock items exceeding sell-by or best-before dates should not be included and should be removed. In-house date labels on pre-prepared food do not guarantee quality; such items should be excluded. Open containers, which may be contaminated, should be excluded. Any stock not included in the valuation should be moved to a designated area for the outgoing licensee to remove. The outgoing licensee must provide proof of cost prices for the previous four weeks’ stock purchases. If unavailable, the outgoing licensee should authorise suppliers to provide copy invoices. If assurances of actual costs cannot be obtained, the maximum discount should be applied.

Glasses

Boxed Glasses
New boxed glasses should be included unless there is a valid reason for non-use. Consideration should be given to the stock type, with unnecessary items excluded or valued minimally. Used boxed glasses should be checked against box labelling, with a discount applied based on condition. Old-fashioned glasses may be discounted further.

Loose Glasses
Loose glasses are likely used and should be discounted accordingly. Odd glasses should be valued at a reduced rate. High-quality or speciality glasses should be valued at market value, with large quantities included only if pre-arranged. Promotional glasses supplied free of charge should not be included, except for brewery logo glasses charged to the client, with proof of value required.

Cleaning Materials

Miscellaneous Consumable Cleaning Materials
Non-specific items like tinned polish, mop heads, and bleach should be valued based on the outgoing licensee’s invoices. Items purchased more than four weeks ago should be valued at estimated market value. Specific items designed for current equipment should be excluded unless the outgoing licensee proves compatibility with transferred equipment.

Sundry Items

Miscellaneous Consumables
Non-specific items like stationery and order pads should be included only if they do not carry the outgoing licensee’s details. Specific items like till rolls should be excluded unless guaranteed for current equipment use.

Fuel
The outgoing licensee should provide invoices for oil or gas in tanks, with supplier contact for content verification. Oil tanks should be manually dipped in addition to meter readings. Invoices for coal and logs should be provided, with market value applied for purchases over four weeks ago.

Utility Readings

Meter readings should be taken in the presence of a witness, with photographs where possible, and included on the valuation certificate.

Container Deposits

Empty Bottles and Cases
Bottles stored in returnable cases should be included if they can be returned to current suppliers. Empty cases returnable to a current supplier should be included. Other containers subject to deposit should be notified in advance by the outgoing licensee.

Invoice and VAT Considerations

For the sale of goods between the outgoing licensee and the ingoing licensee, best practice dictates that all transactions should be documented with detailed invoices that include VAT where applicable. Food stock is generally not liable for VAT, and this should be clearly indicated on the invoice. For other items, such as liquor and cleaning materials, the outgoing licensee must ensure that VAT is appropriately applied and documented in accordance with UK finance laws. The outgoing licensee should provide VAT invoices that itemise the stock sold, ensuring the ingoing licensee can claim back the VAT if they are VAT registered. Both parties should retain copies of these invoices for their records to ensure compliance with HMRC requirements.