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BOYCE HATTON: Buying and selling hotels

By Herald Express  |  Posted: December 12, 2013

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THE recent summer could not have been better in highlighting the many qualities that the Bay has to offer. None more so than the hotel and leisure industry. The good weather brought with it large numbers of visitors from near and far and showed the attractiveness of living and working within this industry.

If you are looking to sell or buy a hotel or guest house business (or indeed any business) it is important to seek expert legal advice. Ashley Bevans, solicitor and associate with leading firm Boyce Hatton, sets out some of the more salient points that should be considered in such transactions:

1 Selling or buying a hotel is not simply a bricks and mortar property transaction. The vast majority will involve the transfer of a business as a going concern. This will therefore also include a sale of other 'assets' that include the goodwill (name, trade and reputation), inventory (equipment/plant), and stock (food, drink and sundry retail items). The contract will need to contain provisions in dealing with each asset to be included or excluded as part of the deal.

2 As well as seeking legal advice from an appropriately qualified solicitor, guidance should also be sought from an accountant. This is because typically the purchase price will need to be 'apportioned' or split between each of the assets. How the apportionments are decided can have tax consequences, particularly with regard to VAT, Stamp Duty Land Tax, and Capital Gains Tax.

3 Ensure you have a full survey undertaken of the premises in order to ascertain as much as possible their state and condition. How much in repair premises are will have a bearing on any price agreed for the property asset.

4 It is important to ensure that you have all complied with all relevant statutory requirements. These will include an asbestos assessment, fire risk assessment, and evidence of compliance with non-discriminatory disabled access and support under the Equality Act 2010.

5 If the hotel or guest house has a premises licence for the retail sale of alcohol, a legal requirement, then this will need to be transferred to the purchaser upon completion. However, unless you have a personal licence, the premises licence will not be able to be transferred. Your solicitor will be able to advise more fully of these requirements.

6 In addition to the four principal assets that will generally be sold and purchased the benefit of a number of contracts and licences may also be transferred. This can include for example consent from the Performing Rights Society for non-private playing of music, supplier contracts, and advance bookings.

7 If there are any employees then under TUPE or the Transfer of Undertakings (Protection of Employment) Regulations 2006 they will generally transfer to a purchaser. Failure to do so could result in a claim being brought by an employee against either a seller or a purchaser for unfair or constructive dismissal. Careful legal advice should therefore be sought.

8 Will you intend to live at the hotel/guest house? If yes, it is important to check that all relevant statutory consents such as planning permit this. Where purchasing with the aid of a mortgage, your solicitor should check that the terms and conditions of the mortgage permit you to live in the business premises.

9 Do the premises have the benefit of all necessary planning and building regulation consents? Even if immune from enforcement action, the absence of an express planning consent for use as a hotel/guest house could make obtaining certain insurances, licences, and consent difficult or impossible. It is important therefore that all usual searches and enquiries of the Local Authority are made in this regard to confirm the position.

Ashley Bevans is a Solicitor and Associate at Boyce Hatton Solicitors. He can be contacted on 01803 403403 or at ashley.bevans@boyceatton.co.uk More information is available by logging on at www.boycehatton.co.uk

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