Loose stock valuation guide aims to cut rows
Trade groups have welcomed "long overdue" new guidelines for loose stock valuations when pub businesses change hands. The new code of practice published by the Institute of Licensed Trade Stock Auditors (ILTSA) aims to end arguments between buyers and sellers over values of wet stock and other items such as glasses and cleaning materials.
ILTSA says the current system is "unsatisfactory and haphazard" and often leads to stressful arguments and disputes between the two parties. The code lays down clearly defined guidelines about what can be sold, what the purchaser is obliged to buy, guidance about the condition of stock and shelf life of various commodities.
Loose stock involves items not covered by the agreed fixtures and fittings sale inventory and its value is negotiated by the two parties on the day of changeover.
"Until now issues like these have been hotly debated until one side backs down and an agreement is reached. The guidelines ensure a more professional, low-risk approach to valuations to help all parties reach an acceptable agreement," an ILTSA spokesperson said.
Common disputes centre on half-empty spirit bottles, the condition of glassware, cleaning materials and valuation and age of frozen food.
The new code was welcomed by trade chartered surveyors Fleurets, which also endorsed a recommendation to appoint qualified advisers in all elements of transactions. Director Simon Hall said:"The guide is a much needed clarification of the issues that arise when valuing stock at changeover and I am sure it will be well received."
Federation of Licensed Victuallers chief executive Tony Payne said the guidelines would help the smooth running of stressful changeovers.
"Disputes inevitably surface and my advice would be to appoint a qualified stock-taker to be present when these valuations are made. Ideally outgoing licensees should run their stock down as much as possible although this is not always possible," he said.
KEY points in ILTSA's GUIDANCE
The ILTSA says the guidelines are designed to introduce a new element of fairness and provide buyers with essential due diligence against problems encountered with any stock they have purchased.
Key areas covered include:
l Partly-filled bottles of spirits. Invoices should be available as proof of purchase and hydrometer testing available to check the strength. Value calculated as a fraction of invoiced wholesale price.
l Frozen food. In-house made-up dishes and goods not in an original packet or container without a sell-by date will not normally be valued.
l Cleaning materials. Only full packs of goods will normally be valued.
l Branded glassware. Invoices should be made available to demonstrate the glasses were not given free by a brewer or drinks company.
l Main-line spirit bottles should carry duty stamps as required by law from
1 January.
