The United Kingdom Warehousing Association (UKWA) – the trade association representing the third party storage and logistics industry – is in discussion with Her Majesty’s Revenue & Customs (HMRC) in an attempt to clarify HMRC’s policy on Customs Warehousing status.
UKWA, whose members operate over one million square feet of warehousing space across the UK, is concerned that HMRC is aggressively targeting bonded warehouse operators and revoking the authorisation to store duty suspended goods in instances where operators have been found not to have held goods under bond for a relatively short period of time. Such a policy could have serious commercial implications for some of its member companies, UKWA contends.
“It seems, from feedback we have had from our members, that HMRC is now applying a ‘use it or lose it’ policy to storage facilities that have been granted Customs or Bonded Warehouse status,” says Roger Williams, chief executive officer of UKWA.
“In one instance, a UKWA member company received a letter from HMRC threatening to revoke its authorisation as a Customs Warehouse and, despite producing evidence of future potential contracts, is having great difficulty in persuading HMRC that it should be allowed to maintain its customs warehouse authorisation,” explains Roger Williams.
He adds: “On behalf of our members we are asking if it is now HMRC policy to adopt a more aggressive and rigid approach to bonded warehousing status. Given that such a policy is unlikely to raise revenue for the exchequer but would limit a company’s operational flexibility, it is hard to understand the motivation for such an approach.”
In simple terms, customs or bonded warehousing allows traders who import goods to delay paying duty and/or import VAT. Duty is not payable as long as the goods remain in the warehouse and it only becomes payable when the goods are released.
Roger Williams continues: “Having bonded warehouse status has always given third party storage companies a significant commercial advantage – for obvious reasons the ability to defer payment of duty is an attractive option to importers. The loss of bonded accreditation could, therefore, have a significant commercial impact on many businesses in the storage industry.
“Furthermore, before a company is granted customs warehousing status by HMRC, it has to make a significant investment in processes, procedures, systems and staff training. It would be very harsh if this investment were to be wasted because HMRC has decided to adopt a new stance.
“Of course, we accept that it is right that companies are regularly checked to ensure they have processes and procedures in place to store goods under bond in the correct and legal way, but we do not expect HMRC to add unnecessary extra burdens to businesses in what are already extremely tough conditions.”
“We hope HMRC will clarify its exact position so that those UKWA members that have customs status can take any steps needed to ensure that they retain it.”