On 23 March 2012 the Government launched its Alcohol Strategy. The strategy is targeted at harmful and hazardous consumers and aims to limit the impact on responsible consumers. The Government's response to the Alcohol Strategy consultation, published on the 17 July 2013, set out the Government's intention to ban below cost selling to tackle the availability of below cost alcohol.
The Government has established 'cost' as the amount of 'duty plus VAT', defined as the level of alcohol duty ('duty') for a product plus value added tax ('VAT') payable on the duty element of the product price.
The ban is aimed at the prevention of businesses selling alcohol at heavily discounted prices and aims to reduce excessive alcohol consumption and its associated impact on alcohol related crime and health harms.
The legislation has now been approved and came into force on the 28 May 2014. The ban will take the form of a new licensing condition of the Mandatory Code of Practice established under the Licensing Act 2003. The Mandatory Code of Practice applies to all licensed premises, including those with club premises certificates, in England and Wales. Failure to comply with the permitted price condition may be an offence under Section 136 of the Licensing Act 2003. This may result in review of the licence or a closure notice under Section 19 of the Criminal Justice and Police Act 2001.