HMAG30150 - Registration and approval: premises approved as both a customs warehouse and an excise warehouse
A single premises may be approved to operate both a customs warehouse and an excise warehouse. This would require a Customs Warehousing Approval, and a separate Excise Warehousing (warehousekeeper and premises) approval.
A customs warehouse allows the storage of chargeable goods imported where customs duties (including import VAT) and excise duties are suspended.
An excise warehouse allows the storage of imported goods that have been customs cleared to free circulation, and UK produced goods to be stored with only excise duty (and VAT) suspended.
General principle
Where a premises is approved for both regimes, the normal expectation is that goods held under customs warehousing arrangements and goods held under excise warehousing arrangements will be physically segregated and stored in clearly defined areas. Physical segregation provides the clearest means of demonstrating compliance with both warehousing regimes and will normally enable HMRC assurance activity to be carried out more effectively.
Warehouse plans should clearly identify the areas approved for customs warehousing and excise warehousing and show how goods held under each arrangement are distinguished from one another.
Alternative storage arrangements
HMRC recognises that physical segregation may not always be the most practical or effective approach. In some circumstances there may be commercial, operational or control-related reasons why a warehousekeeper wishes to store customs warehoused goods and excise warehoused goods within the same storage area.
Storing customs warehoused goods and excise warehoused goods together without segregation should be the exception, not the norm.
Co-located storage may only be considered where:
- the customs warehousekeeper and excise warehousekeeper are the same legal person/entity;
- that legal person/entity holds and is responsible for both approvals;
- HMRC is satisfied that adequate systems and controls are in place to manage the arrangement effectively; and
- the storage arrangement is recorded within the relevant approval documentation and any necessary approval conditions.
The warehousekeeper must show that the proposed arrangements provide a level of assurance equivalent to, or greater than, that which would be achieved through physical segregation.
Required controls
Where co-located storage is proposed, the warehousekeeper must be able to demonstrate that their warehouse management systems and records can clearly identify:
- whether goods are held under customs warehousing arrangements, excise warehousing arrangements or any other duty status;
- the quantity of goods under each regime;
- the location of the goods within the premises;
- all receipts, removals, transfers and adjustments affecting those goods; and
- a complete audit trail linking physical stock to the records maintained for each approval.
The arrangements must also allow:
- complete stock reconciliation between physical goods and warehouse records;
- effective audit by HMRC officers; and
- the prevention, detection and correction of errors affecting either warehousing regime.
Officers should not approve storage only because the electronic records distinguish the stock. Officers must be satisfied that the systems, controls, record keeping and audit trails are sufficiently robust to maintain proper supervision of both approvals.
HMRC officers must be able to establish the warehousing status of any goods selected for examination and reconcile physical stock to warehouse records. Where officers cannot verify the status of goods, or where the integrity of the records cannot be relied upon, physical segregation should be required.
Circumstances where physical segregation must be required
Co-located storage must not be permitted where different legal persons/entities are responsible separately for the independent operation of the customs warehouse approval and the excise warehouse approval.
In these circumstances, goods held under the respective warehousing arrangements must be physically segregated and clearly identifiable. This ensures that responsibility for the goods, compliance obligations and any resulting customs or excise liabilities can be clearly established.
Physical segregation should also be required where HMRC is not satisfied that the warehousekeeper's systems, controls, records and audit trails provide an equivalent level of assurance.
Interaction with co-storage arrangements
A customs warehouse or excise warehouse may also be authorised to store goods that are not held under the relevant warehousing arrangements, such as duty-paid goods, under an approved co-storage arrangement.
Where duty-paid goods are stored alongside customs warehoused goods, excise warehoused goods, or both, the warehousekeeper must maintain controls sufficient to distinguish between all relevant statuses.
Depending on the nature of the approval, officers should be satisfied that the warehouse management system can clearly differentiate between:
- customs warehoused goods;
- excise warehoused goods;
- duty-paid goods; and
- any other goods present within the approved premises.
The addition of co-storage goods increases the complexity of warehouse controls and increases the risk of goods being incorrectly accounted for or removed under the wrong regime. Officers should therefore consider whether the proposed arrangements continue to provide an acceptable level of assurance before approving or continuing such arrangements.
Temporary Storage status goods
The co-location arrangements described in this section do not apply to goods held in an excise warehouse and goods held in temporary storage in a temporary storage facility.
Goods in temporary storage and goods held under excise warehousing arrangements must always be physically segregated and clearly identifiable. HMRC will not permit the co-location of temporary storage goods and excise warehoused goods, regardless of the systems or record-keeping controls in place. This is because goods in Temporary Storage have not been declared to a customs procedure and have specific rules with distinct supervisory and control requirements.
Other customs special procedures
The principles set out in this section may also be applied to other customs special procedures, including inward processing, temporary admission and free zones. Any proposal to store goods subject to those procedures alongside goods held under excise warehousing arrangements should be assessed against the same standards of control, traceability, record keeping and auditability as would apply to a combined customs warehouse and excise warehouse arrangement. Where those standards cannot be demonstrated, physical segregation should be required.