Please note: The Customs People is a customs and excise specialist, and whilst we can advise on setting up bonded warehouses, we do not own or operate them ourselves - similarly, we do not provide customs clearance services.
The Customs People has a great deal of knowledge and expertise when it comes to all aspects of using bonded warehouses to store goods. We can offer advice and consultation to your business relating to the reassessment of open-ended customs authorisations.
What is a bonded warehouse?
A bonded warehouse is a secure space in which goods liable to import duty and VAT are stored. Customs duty and VAT payments on these items are deferred until the goods are sold or removed from the bonded warehouse.
Storing items this way has a number of benefits for sellers who import or sell goods that are liable to these charges. For this reason, suppliers of wine, food, tobacco and spirits are common users of bonded warehouses.
Those businesses supplying goods in, or removing them from a tax warehouse in another EU member state, should be aware that the rules and procedures may be different to those that apply in the UK.
It is, therefore, advisable to consult the authorities in that member state if there are any doubts about legislation.
Why are bonded warehouses used?
There are a number of reasons why a bonded warehouse may be a desirable option for importers and exporters of certain products. These include:
- Deferred payments on such products mean that no tax is paid until the goods are sold, which can considerably improve cash flow for businesses. In many cases, this can be between 25% and 33% of the upfront cost of imported goods.
- If the goods are set to be exported, no duty will be payable in the UK, but paid in the country of destination. This means double duty payments will be avoided, leading to further savings.
- Goods can be imported and stored in bonded warehouses in advance of peak season, meaning they are available for order fulfilment without delays.
- Very often, bonded warehouses have specialised facilities, such as deep freezes of large vats to store wine or spirits.
- Inward and outward customs documentation is often provided by the bonded warehouse facility.
Trading in a tax warehouse
Registration for VAT
Should your only business activity be the supply of goods within a tax warehousing regime, you have no need to register for VAT, but you may do so voluntarily under the VAT Act 1994. Your liability to register for other business activities is not affected by the value of supplies of goods or services made in a tax warehouse.
VAT implications of placing goods in a tax warehouse
VAT does not have to be paid when excisable goods subject to a warehousing regime are placed in a bonded warehouse for those goods. VAT may be due when goods are removed from the warehouse to home use and is payable together with any suspended duty by the person who is removing the goods (or by the person liable to pay the duty).
VAT due on removals from tax warehouses
VAT is due on the last supply of goods in the warehouse and must be accounted for and paid (or deferred) when the goods are removed from the warehousing regime to home use. The VAT due usually depends on the origin of the goods and whether any subsequent supplies take place while in the tax warehouse in the UK.