Losses in warehouse
What to do if your goods are destroyed or irretrievably lost when in the customs warehouse procedure.
Where the total destruction or irretrievable loss of goods can be proved to arise from unforeseeable circumstances, force majeure, natural wastage or some other legitimate cause, duty may be waived.
Goods are considered irretrievably lost when they become completely unusable.
Where natural wastage is given as a reason for a non-chargeable loss within the customs warehouse procedure, it must be proven that the loss arises solely from the nature of the goods and not from the trader’s negligence or manipulation.
Negligence or manipulation means failure to comply with transporting, storing, handling, working or processing rules, as required by HMRC or by normal practice.
The following are examples of natural wastage:
- maturation
- natural fermentation
- humidity
- desiccation
- venting as gas or leaching
- temperature effects on a product
Force majeure is defined as abnormal and unforeseeable circumstances beyond the control of the trader, which cannot be avoided despite due care, such as an accidental fire or flood or failure of temperature control in a cold store.
This does not apply to circumstances where the fault has occurred on the part of the trader, its supplier or any other third party. Since it is extremely difficult to establish force majeure, HMRC does not expect this to be applicable to many situations.
In general, the loss of goods through production, for example losses occurring through normal handling of the goods, can be treated as non-chargeable losses but not to be confused with and as a result of a usual forms of handling, as described in sampling and testing.
If such losses are a regular occurrence, it should be stated in the application and authorisation letter. Authorisation must be obtained prior to any loss rate being applied.
Losses in circumstances other than those mentioned in non-chargeable losses in warehouse will incur import VAT and a customs debt where the customs duty exceeds £9.
Goods that are missing, mislaid or stolen cannot be considered non-chargeable losses in a warehouse. In these cases, customs duty must be paid.
If stolen goods are recovered promptly and returned to the customs warehouse, in the same state they were in when they were stolen, the customs duty for those goods can be repaid or remitted.
The rate of duty charged for losses is the rate in force at the time the loss occurred. Where it is impossible to determine the time of the loss, the duty rate to be used is the highest rate in force between the last time the goods were known to have been in the warehouse and the date of notification of the loss.
If the chargeable loss involves goods that have been lost in a customs warehouse, customs debt must be calculated at the full duty rate.