Bonded Warehouse

An ideal solution for those who import goods from overseas, but don’t have optimal storage or would rather spread out the cost of HMRC payments, bonded storage warehouses provide a duty-free storage zone. You won’t be liable for customs duty or VAT until your stock leaves the premises.

A bonded warehouse essentially acts as a temporary storage place for your dutiable goods, in between shipping them over and selling them on. Businesses with international supply chains can store their stock in the supervised warehouse under the regulations of the local customs agency.

Bonded warehousing also gives you the opportunity to inspect and modify goods before either releasing them into the local market or exporting them to another country. This includes various processing activities like testing, grading, labelling, packaging, sorting, and similar procedures.

‘Bonded goods’ are basically any items brought into the country that are liable for customs charges, including duty and tax payments. The goods are ‘bonded’ because they are held in a duty-free facility ahead of customs processing. These payments are deferred until the goods are released.

To be eligible for storage in bonded warehousing in the UK, goods generally must be imported from a non-EU country, or imported from an EU country under Community Transit, temporary duty suspension, or common storage laws. You can usually store bonded goods for as long as you like.

Wet bonded warehouses can store alcohol, tobacco, and other such products, while dry bonded warehouses have more restrictions on what can be stored in them. Food and other goods covered by the Common Agricultural Policy will be subject to specific quantity and time frame limitations.

Whether you know of these facilities as a tax warehouse, excise warehouse, or Queen’s warehouse, there are a few types of bonded warehousing that allow the storage of different goods. A bonded warehouse can be private – used only by the owner – or public, like the John K. Philips warehouse.

This doesn’t mean that it’s open to the public, but rather that we use our facility to store goods belonging to third parties, known as depositors. Another factor is whether a warehouse accepts ‘wet’ or ‘dry’ goods. Wet bonds cover goods subject to excise duty – like alcohol, tobacco, and fuels – while dry bonds cover general goods. You can store goods in a bonded warehouse if they’re:

• • Liable to customs duty, excise duty, or VAT (non-EU goods)
• • Awaiting licences or supporting documentation (non-EU goods)
• • In a suspended arrangement for re-exporting (non-EU goods)
• • Eligible for a Common Agricultural Policy refund on export (EU goods)
• • Subject to a duty repayment claim that requires exporting them after being in free circulation

Certain animal and plant products, medicines, and chemicals are also subject to licensing regulations as controlled goods. Neither the warehouse-keeper or the depositor can handle and store goods that don’t have the required documentation and licences – including an EORI number (if applicable).

Under ‘usual handling’ rules, you’ll be allowed to store your goods, enhance their presentation, or prepare them for distribution/resale within the bonded storage area. When relying on bonded warehousing, make sure your paperwork is in order – especially if you’re delegating the HMRC processing to the warehouse-keeper – and that the facilities have the appropriate storage type.

There are many costs associated with importing goods, so we understand why you may be wary about the additional expense of bonded storage. After all, there’s the cost of shipping itself, then VAT is at least 20%, while trade tariffs vary according to the commodity. Why spend even more?

The thing is, deferring VAT and customs duty payments through bonded warehousing actually helps you to save money by only owing these taxes after the goods have been sold. It allows you to control cash flows and keep up with supply and demand, which is well worth the bonded warehouse fees.

Since bonded warehouse costs are calculated according to the value of the goods and the amount and type of storage space they require, we unfortunately cannot provide a specific price. However, we always aim to provide competitively priced services at John K. Philips, so please do get in touch.

There are a number of benefits that come with bonded warehouse storage, many of which involve saving money and valuable time. Some of the major advantages of bonded warehousing include:

• • Cost-effectiveness

The primary selling point of storing imported goods in a bonded warehouse is the potential for huge financial savings. VAT and duty charges can reach between 25% to 33% of the cost of the goods, which can hamper your cash flow if you have to pay upfront instead of deferring or exporting.

• • Convenience

Any business owner who regularly deals with shipping goods will be familiar with storage difficulties. Bonded warehousing provides a convenient solution for secure external storage of imported goods, ready for distribution or exportation. Warehousers can even sort out the paperwork on your behalf.

• • Security

If you have large volumes of valuable goods and nowhere big enough to store them safely, a bonded warehouse is the perfect place to keep your shipments. Customs warehouses are meticulously audited by HMRC and provide full security services, in addition to specialist storage facilities.

• • Streamlined distribution

Facilities like the John K. Philips bonded warehouse are located close to sea ports, airports, and major motorways or rail links. It’s easy to store your imports near the port of entry, and use national or international transport networks to move the goods whenever you’re ready, reducing lead times.

At John K. Philips, our bonded storage services cater to individual company needs, enhancing efficiency and customer satisfaction while reducing business expenses. With pick, pack, and dispatch delivery also available, we can manage distribution for you as well as customs paperwork.

Storing imported goods in a bonded warehouse gives you some breathing room as a business. You’ll have more time to organise and pack goods and finalise your distribution plan, without having to pay HMRC upfront. Customs taxation is deferred until you sell the goods, so you won’t be out of pocket.

With the suspension of import charges, or completely bypassing them if you export the goods without them entering the local market, you can better maintain your cash flow. You’ll also avoid double taxation if you intend to move the goods on to another country and circulate them there.

It’s inevitable for supply and demand to fluctuate over time, but bonded storage allows you to withdraw and sell goods as and when you need, only paying import duties when your revenue is already secured. You can maximise your profits according to exchange rates and market prices.

Any individual or business who sells products that are liable for customs duties when imported or exported between other countries and the UK can use a bonded warehouse to temporarily store their products. Importers who need somewhere to legally hold goods when they enter the UK before moving them on to another destination will find these facilities beneficial.

To be eligible for storage in a HMRC-authorised bonded warehouse, which allows you to enter an agreement with the provider for an associated fee, your goods need to be imported from a foreign territory outside the EU and be liable for import VAT and/or customs duties. It’s a good idea to use a bonded warehousing facility to store such products if you/your business:

• • Plan to export the goods back out of the UK without circulating them
• • Aren’t certain of the final destination for your goods until after they’ve arrived
• • Are waiting for the completion of import licences or duty relief paperwork
• • Want to store goods together that are subject to different customs procedures

There’s a fair bit of administration involved in setting up bonded storage, but it definitely makes life easier for anyone moving goods into the UK in large quantities. You’ll soon discover that it improves the efficiency of your inventory and cashflow once the logistics are all in hand.

Not all traders need or want to move their goods through customs bonded warehouses, but there are times when it may be necessary or simply more efficient for your business. You might find it helpful to use bonded warehouse storage if you’re regularly importing goods into the UK, but you:

• • Intend to re-export them to another country afterwards
• • Aren’t certain about their final destination for sale
• • Are waiting for delayed licences or paperwork before you can circulate the goods
• • Want to store shipments under different customs procedures together
• • Need to hold the items for a while to defer customs duty payments for cashflow reasons

When you place goods in a bonded warehouse, it’s your responsibility to declare them correctly, regardless of how long you plan on storing them. You must provide us with all the details for your customs declarations so that we can store and transfer them in compliance with HMRC regulations.

One of the most appealing benefits of this type of storage is that you generally don’t have to worry about how long you can store goods in a bonded warehouse. With the exception of perishables and Common Agricultural Policy (CAP)* goods, there’s usually no time limit on how long you can store goods in a bonded storage warehouse in the UK.

Of course, it depends on the provider, as some might set a limit on maximum storage terms (e.g. five years), and also on your budget, as you’ll have to continue paying for the storage services as long as you use them. However, the quality of your goods will be maintained during this time, and you may be able to make changes to satisfy import requirements.

Being able to keep your stock in long-term bonded storage can alleviate the pressure to make sales when demand may be low, as you can safely wait until demand increases or exchange rates are more favourable to ensure that your business makes a higher profit when you’re ready to sell. Duties will then be payable once the goods leave the warehouse.

*CAP goods include meat, poultry, fats, oils, sugar, fruits, vegetables, cereals, rice, eggs, and dairy.

Bonded storage may not be the best storage option for every type of business. For example, if you prefer to have full control over your administrative processes and legal liabilities, you might not want a bonded warehouse to manage product storage, modifications, and administration for you.

On the other hand, it can save a lot of time and money in the long-term if you outsource these activities to a reputable bonded storage facility. If your operations fall under any of the following categories, then it could greatly benefit you to contact John K. Philips about bonded warehousing:

• • Importing dutiable goods as part of your business
• • Constantly handling huge volumes of goods
• • Requiring highly secure storage for your stock
• • Exporting previously imported goods to a third country
• • Necessitating special care for restricted items

Of course, the longer you keep your consignments in bonded storage, the more the warehousing costs will add up. You’ll have to take this into account if you intend to store imported goods for indefinite periods of time. You can always call John K. Philips for further guidance on these services.

Yes, our bonded warehouse facility is completely secure. We carefully document every shipment we receive using our trackable barcoding system, and store your goods in the most suitable place for their product type and consignment size within our state-of-the-art facilities.

No matter the value of your goods or the size of your inventory, we safeguard your stock with security measures such as CCTV cameras, alarms, and regular manned patrols. Our security staff keep the premises under surveillance 24/7, protecting your goods around the clock.

Reputable companies running bonded warehouses, like John K. Philips, are subject to authorisation and auditing by HMRC. You can be confident that our operations are always above board and that we keep up with compulsory documentation to meet safety and tax regulations.

Bonded warehouses in the UK have a long history, dating back more than 200 years. Before this, any trader bringing goods from another country into Britain would immediately have to pay duties.

Of course, the legislation has been updated many times since it was first implemented in the early 1800s, but the purpose remains the same. Allowing importers to temporarily store goods tax-free until they are sold helps to streamline commerce and reduce fraud through undeclared imports.

Since bonded warehousing status is given to the operator and not the building, it’s not possible to buy a pre-established customs warehouse. Traders go to trusted operators like John K. Philips instead. There are several types of bonded storage in the UK to choose from, which include:

• • Type B – public customs warehouse, run by an operator and available to any importer
• • Type C – private customs warehouse, for which the owner assumes all responsibility
• • Type D and E – private customs warehouses, used only by the owner/administrator
• • Wet bonded warehouse – can be used to store alcohol, tobacco, etc
• • Dry bonded warehouse – cannot be used to store alcohol or restricted goods

None of these are the same thing as a Special Economic Zone (SEZ), which is usually a limited port area where the laws that apply are different to the regulations throughout the rest of the country.

While a bonded warehouse is a building run by a licenced operator, where customs payments are temporarily suspended, a freeport customs site is a wider geographical area. More like a bonded logistics park, there can be multiple warehouses and storage facilities within one regulated zone.

The main difference between the two types of customs-free zones is that bonded warehouses and the goods stored in them are considered inside the country, while freeports and goods within them are considered to be outside for legal purposes – despite being physically present in the territory.

This means that goods within freeports are subject to different tax rates and exclusions to the rest of the domestic territory beyond the boundaries of the zone. However, goods stored in regular bonded warehouses are still subject to the same taxes – they’re just deferred while the goods are in storage.

Since the UK officially left the EU in early 2020, many international trade regulations have changed. This means more paperwork, customs declarations, and payable duties on imports from Europe to the UK, and exports from the UK to Europe. As a result, many businesses have shifted their supply chains to find new sources in other foreign territories.

However, bonded warehousing can soften the blow somewhat by allowing you to hold goods imported from outside the EU in storage until you’re ready to pay customs taxes on them. This helps you to avoid the dreaded ‘double duty’ scenario if you plan to move goods on to enter circulation in the EU, as you won’t have to pay duties in the UK if the goods don’t enter circulation there.

Since bonded warehouses allow you to delay the point in the process when duties become payable, they’re a great resource for importers who need to temporarily store goods – and perhaps make small changes such as packaging them a certain way – before exporting them out of the UK again.

This can also make it easier for you to manage stock and seasonal demand without having to worry about the widely reported hold-ups in the increased volume of post-Brexit paperwork processing.