Industry views | 15 February 2019
By Clive Brady, Duty & VAT Manager
Brexit is now just around the corner. While we’re still no clearer as to what the UK/EU situation will look like come 23:01 on 29 March, we can at least be certain that there’s already been an impact on supply chains.
In my area of the business, bonded warehousing, there are additional challenges around licences, duties and capital expenditure to take into consideration when making contingency plans.
First, it’s probably helpful for me to clear up a common misconception. Although mostly used together, and sometimes interchangeably, Customs & Excise are not the same thing:
Let’s take a look at this from an import point of view.
Every item eligible for customs and/or excise duty landing in the UK, such as alcohol, is subject to a duty payment upon arrival. The company importing the item is legally obligated to declare the items and pay the relevant duties.
With the capacity pressures Brexit could add to the supply chain, particularly at ports of entry, duty-suspension could be an attractive process for both importers and exporters. To this end, deferring payment of customs duty can increase you cash flow and create working capital benefits.
If these items are to be stored at a bonded warehouse, the duties owed can be deferred until the point they leave the warehouse again. So, you could drastically increase your stock holding in the UK but defer payment of your duties until these items make it into circulation.
How would that work in a Brexit situation? You could import your goods at a larger quantity than usual to mitigate any supply chain risks post-Brexit. Ensure you’ve stockpiled enough in the UK to see you through any short-term supply issues. But if you dramatically increase your imports, you dramatically increase your duty payments. Finding that additional capital, at short notice could mean the difference between those businesses able to make it through Brexit, and those that can’t.
In this situation, a bonded warehouse could be the answer.
Wincanton operate a number of bonded warehouses, such as Greenford, Greater London, which, as explained above, can be a useful tool for those customers looking to mitigate the risks of Brexit and the reduce the financial burdens associated with it. Particularly for those business looking for fully bonded, flexible pay-as-you-go storage or value-added services such as re-labelling.
Not only this, but Wincanton holds Authorised Economic Operators (AEO) and is HMRC audited and approved, so you can be assured our systems and procedures are compliant with all customs and excise regulations.
We’re your one stop spot to shop for all your bonded warehousing needs.
For further information please contact:
0333 247 2411