Key legal checks when buying a pub business

Buying the business side of a pub brings its own legal challenges. Employment liabilities, supplier contracts, licensing requirements, and stock arrangements require careful review to avoid unexpected risks after completion.

This article is part two of our series on buying a pub. If you're considering the purchase of the premises itself, read part one on how to buy a pub and get the legal side right.

If you're considering buying a pub and need support with the legal process, contact our solicitors for clear, practical guidance tailored to your plans.

1: Key legal documents

Start by reviewing the core legal documents that define the deal. These set the framework for everything that follows.

Business sale contract

When drafting a business sale contract, key legal issues include defining the sale structure (asset or share sale), due diligence, warranties and representations, liabilities, intellectual property, contracts, employment matters, and dispute resolution mechanisms.

Sale structure

Determine whether the sale involves transferring the business's assets (e.g., equipment, inventory, goodwill) or the company's shares.

• Asset sale: The buyer acquires specific assets, not the company's liabilities, but may need to take on some liabilities related to those assets.
   
• Share sale: The buyer acquires ownership of the company, inheriting all its assets and liabilities.

For a more detailed comparison, see our article on share purchase vs asset purchase.

Business structure

Consider the legal structure of the business (e.g., sole proprietorship, partnership, limited liability company) and how it impacts the sale.

For more on choosing the right structure, see our guide to sole traders, partnerships, and limited companies.

Apportionments

In a business sale contract, apportionments divide the purchase price among the assets being sold, often for tax reasons or to reflect the value of specific assets, and are typically negotiated and detailed within the contract.

Why are apportionments necessary

Apportioning the purchase price allows for a more accurate calculation of capital gains tax, capital allowances, and other tax liabilities for both the buyer and seller.

Apportionment reflects the relative value of different assets within the business, such as land, buildings, fixtures, fittings, goodwill, and intellectual property.

The buyer may need to know the value of specific assets to determine their future use and investment decisions.

Lenders may require a specific apportionment of the purchase price to determine the value of the assets securing the loan.

How apportionments work

The buyer and seller determine and agree upon the apportionment of the purchase price. It is typically detailed in the Asset Purchase Agreement (APA) or the business sale contract. The contract should clearly identify and list all assets being sold, including their value and how they are being apportioned.

A portion of the purchase price might be allocated to the land and buildings, another to fixtures and fittings, and a further portion to goodwill or intellectual property.

If the business operates from a leasehold property, the contract should address how the leasehold interest and any associated rents are to be apportioned.

2: Financial due diligence 

Once the headline terms are in place, it’s time to dig into the numbers. A clear financial picture is essential before you proceed.

Accounts

You should gather as much information about the finances of the business as possible, such as audited accounts, VAT returns, management figures, weekly takings, etc. You should discuss these carefully with an accountant. You must take advice from an accountant who is experienced in licensed properties.

Tax and finances

Pub sales are often advertised as a "Transfer of a Going Concern" (TOGC) to avoid hefty VAT bills on the purchase price. However, there are specific requirements for this benefit (including that both parties are VAT registered and may involve opting to tax the pub), which must be considered. In addition, this may affect ongoing VAT charges on any rent if the pub is leasehold.

Finally, you may be able to claim capital allowances on the plant and equipment at the pub, although this will depend on any claims made already by the seller.

If the pub is being sold as a business, can form a separate business in its own right, and is used by the purchaser to carry on the same activities as operated by the seller, it may qualify as a TOGC.

If a business is a TOGC, the transaction may be outside the scope of VAT and, therefore, may be financially beneficial. TOGCs are just one of the factors your solicitor will consider in tailoring the contract and lease/transfer documents to the needs and advantages of your business.

This can be a complex area, and you should speak to your accountant or tax adviser early to maximise any available capital allowances and avoid unexpected VAT bills later down the line.

3: Employment and staffing

The people side of the business can be just as complex. If you're taking on staff, you’ll need to understand your legal obligations from day one.

TUPE

If the pub has existing staff, their contracts may automatically transfer to you under TUPE (Transfer of Undertakings - Protection of Employment) Regulations unless the sale specifically excludes them.

TUPE creates legal protection for the existing employees on the sale of a business under TUPE, so it is essential to check when TUPE applies and its practical implications, such as the employee's legal right to be transferred to the new employer on their existing terms and conditions, with their existing employment rights and liabilities intact.

Keeping the existing staff knowledgeable about running the pub may be a benefit if you are new to the business, but it may be of no help if you are looking to reinvent the premises or save costs by reducing the headcount.

If you would like to dismiss pre-existing employees or change the terms and conditions of their employment, it is crucial to check if there are any relevant restrictions. You should take employment advice early and negotiate any arrangements for the pub's employees as part of the deal agreed with the seller.

Falling foul of TUPE and the consultation requirements under those regulations can give rise to potential claims in the Employment Tribunal – a significant cost you may not have budgeted for.

For a detailed overview, see our TUPE guide (PDF).

Minimum wage and pensions

As the new employer, you’ll be responsible for ensuring that all staff are paid at or above the applicable National Minimum Wage or National Living Wage, depending on their age and employment status. Failure to comply can lead to HMRC penalties, reputational damage, and potential backpay claims.

You’ll also need to meet your obligations under the auto-enrolment pension regime. This includes assessing employee eligibility, enrolling qualifying staff in a pension scheme, and making the required employer contributions. These obligations apply regardless of whether staff are full-time, part-time, or on zero-hours contracts.

Your solicitor can work with your accountant or payroll provider to ensure all wage and pension liabilities are identified and properly handled as part of the transaction.

On-site accommodation and tenancies

Pub managers also often live on-site in upstairs accommodation. Usually, the manager will be allowed to live at the property as a term of their employment; however, the manager may have a formal tenancy, such as an AST.

It will be essential to establish the precise nature of this interest at an early stage (particularly if the pub manager will not be kept on) so that any tenancy rights can be brought to an end before you purchase the pub. Your solicitor will be able to review the terms of the tenancy agreement further to ensure that you are aware of all obligations contained within this.

4: Tangible and intangible assets

Beyond the basics, you'll also want clarity on what you're getting — from physical equipment to brand value and goodwill.

Stock, fixtures and fittings

It will be important to consider whether you will also be buying the equipment, fixtures and fittings at the pub, such as the beer raising equipment, till system, and pub furniture, as the pub will need this equipment to run.

Other items, such as pool tables and gaming machines, may be leased from a third party, and so you should investigate how these arrangements can be transferred to you, or brought to an end. Stock will generally be transferred on the day the purchase is completed and should be valued professionally to avoid arguments about the price.

Goodwill

Goodwill can be a significant part of what you are paying for if the pub is well-known or has regular trade. The contract should also deal with apportionments, which are adjustments to the price for items such as stock, utility bills, rent, or business rates.

For example, if the seller has paid in full for a month's bills but you complete halfway through the month, the contract should set out how this is split fairly, allowing for a smooth handover.

Intellectual property

If the pub operates under a specific name, logo, or branding, check whether any trademarks or other intellectual property rights are in place.

If you plan to continue using the existing branding, you may need to register a trademark or ensure that the relevant rights are properly transferred as part of the sale agreement. These details should be reviewed carefully and, if necessary, negotiated within the contract.

For more information, see our article on understanding intellectual property in business sales.

5: Commercial arrangements

Pubs often operate within a complex network of external contracts — from suppliers to service providers. Reviewing these commercial agreements is essential to avoid costly obligations.

Contracts with suppliers and brewers

Some pubs are "tied" to specific brewers, meaning they can only purchase alcohol from designated suppliers.

Other contracts may include agreements for food supply, maintenance services, or entertainment bookings. Reviewing and renegotiating these contracts is essential before finalising the purchase.

Public liability insurance

Public liability insurance is a legal requirement for businesses serving the public. This protects against claims for injury or damage (e.g., a customer slipping on a wet floor or breaking a glass). You must ensure that a valid insurance policy is in place from the date of purchase.

How our solicitors can help

Buying a pub involves far more than signing a contract. From title and lease issues to staffing, licensing, and business liabilities, there are multiple aspects to consider — each carrying legal risks that need to be addressed from the outset.

Our solicitors bring experience across commercial property, employment law, and business sales and purchases. 

Whether you're buying your first premises or adding to an established portfolio, we provide clear, commercially focused legal advice to help you move forward with confidence.