Premises guarantees for excise warehouses
Find out why you need to get a premises guarantee and how to get one.
For duty suspended movements of excise goods, financial security must be provided. You can find further details in Receive goods into and remove goods from an excise warehouse (Excise Notice 197).
A premises guarantee, if required, is a guarantee given by an approved guarantor such as a financial institution. Most banks and insurance companies have this approval. However if you want to check a particular company you can ask our Financial Securities Centre.
A guarantee is the only form of security acceptable to HMRC. It will form part of your application for premises approval if we need it.
The guarantor will pay HMRC if a chargeable loss is detected regarding warehoused goods, and the person with the prime, or joint liability fails to pay that duty.
The guarantee is only valid if the named principle has a permanent place of business in the UK.
The cost of maintaining the guarantee is a commercial arrangement between you and the guarantor.
How to get a guarantee
If we ask for a guarantee, we’ll send you a draft guarantee form once we’ve agreed your level of security. If you disagree with the level of the guarantee you can ask for a review of our decision.
You must ask your guarantor to complete the form and send it back to us. If we’re satisfied we have adequate information, we’ll accept the guarantee and send a signed copy to the guarantor.
Duty arising outside of the guarantee
Your liability is not restricted to the size of the guarantee. We can assess the person with prime liability, or notify a joint and several liability, for all outstanding duty arising from any chargeable loss in the warehouse. These liabilities may be significantly greater than the size of the guarantee.
The level of security required
For general storage and distribution and motor and heating fuel warehouses we’ll base any required level of security on the potential duty due on your average end of month stock, over a 12-month period. We’ll allow for any seasonal variations. If we require security for trade facility warehouses, we’ll base our calculations on the proposed or current throughput levels.
| Potential duty on month-end stock holding | Level of security |
|---|---|
| less than £100,000 | Nil |
| more than £100,000 but less than £400,000 | £100,000 |
| more than £400,000 but less than £1m | 25% of potential duty |
| more than £1m but less than £25m | £250,000 |
| more than £25m but less than £100m | 1% of potential duty |
| more than £100m | £1m |
If we require security for new general storage and distribution warehouses the minimum level required is £250,000.
Reductions for premises security
We may allow a reduction of the guarantee levels for established traders in some circumstances. We’ll only allow this provided, during a specified period:
- HMRC has not made a claim against the security
- no significant irregularities have been identified in the operation of the excise warehouse
We may allow reductions for premises security in the following circumstances:
| If you, the principle, has | and we have | the level of security is reduced |
|---|---|---|
| Provided security for the 2 previous consecutive years | made no claim against the security and no significant irregularities have been identified. | by 50%. |
| Provided security for the previous 4 consecutive years | made no claim against the security and no significant irregularities have been identified. | No guarantee is required. |
If you’re entitled to a reduction, write to the Financial Securities Centre and state the grounds for your request.
If your principle qualifies for a reduction in the level of security, and the new security required is less than £100,000, no security is required.
If we make a claim against a reduced level of security, we’ll issue a ‘notice of withdrawal’ to the guarantor and principal. The level of cover provided by the replacement guarantee will revert to at least 100% of the amounts shown for premises security.
Unless you’ve been granted a reduction in the level of premises security, the level must be reviewed at least every 6 months. You must keep a record of this review.
Changes in trading patterns
If your trading pattern changes you must contact us. A change could result in an increased level of guarantee.
We may carry out checks to make sure that your level of security is satisfactory. If we identify a weakness in your system, or consider your trading pattern has changed, we could ask for additional security as a condition of your approval.
A change in trading pattern could also mean a reduction in the level of security required. If you consider that you qualify for a reduction you should contact us giving the reasons for your request.
Guarantees against more than one set of premises
If you are a principal you can apply for a single guarantee to cover more than one set of premises or to cover both premises and duty-suspended movements. In these circumstances, the month-end stockholding of all your excise warehouses and the amount of movement guarantee must be totalled to calculate the size of the security.
Multi-site security of premises and companies, together with a movement guarantee, gives commercial benefits in terms of the overall level of security required. However, it carries additional risks because if there is one significant irregularity in any of the company’s activities, this would result in either:
- loss of any reductions granted to the entire group
- cancellation of your entire guarantee
Claims against guarantees
In most cases we’ll issue an assessment if you incur a liability covered by your premises guarantee. If appropriate we’ll send a copy of the assessment to the principle of the guarantee.
We’ll only claim against the guarantee if you’ve not paid the assessment within 45 days. Generally, we’ll claim when the principal to the guarantee has a liability for any irregularity resulting in the loss of duty on excise goods stored in an approved warehouse.
If the guarantee covers both premises and movements we’ll still claim against the guarantee. Claims will not be restricted to either premises or movements.
If we make a claim against the guarantee, we’ll ask the guarantor for payment. You should note that:
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the ‘evergreen’ facility of the guarantee allows automatic restitution of the original level of security where, following the submission of a claim, neither party exercises the right to withdraw
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this will affect any ‘established trader’ discount
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the level of your guarantee does not limit the liability of the debt
If the guarantor gives us 30 days notice of withdrawal from the guarantee following the claim against it, you’ll need to lodge a new premises guarantee with us. We’ll cancel your authorisation and approval if you’re not able to provide a replacement guarantor
If we decide to lapse your guarantee we’ll give your guarantor 30 days notice of withdrawal. If we need you to lodge a premises guarantee with us, then unless you are able to provide a replacement guarantor, we’ll cancel your warehouse premises authorisation and approval.
Contact
Contact us at the following address for further details about applying for a premises guarantee:
HM Revenue and Customs
Excise Processing Team
BX9 1GL
Last updated 1 June 2023 + show all updates
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The address you contact us at for further details about applying for a premises guarantee has been updated.
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This guidance has been updated as the Brexit transition period has ended.
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First published.