What is a bonded warehouse and how will it benefit my business after Brexit?
Posted on 09.09.2019
UK logistics and inventory management can be extremely time-critical and will be even more so following Brexit. If you don’t already use bonded warehousing for imports or overseas exports, this brief post provides the essential details and some of the benefits of bonded warehousing following the UK’s departure from the EU.
What is a bonded warehouse?
Bonded warehousing has been in existence since the 1800s, and was first proposed by Robert Walpole as a way for the UK government to handle excise fraud on tobacco and wine. The bonded warehouse system actually came to fruition from 1803 and has worked along the same lines since.
There are several different types of UK bonded warehouse and their primary function is to store any kind of dutiable imported goods or act as a VAT-free haven for goods imported to the UK which will then be exported on to another overseas destination. Most of the major bonded warehouses are located close to ports and airports, in order to offer the speedy time-critical logistics required by business organisations.
The main beauty of the bonded warehouse system is that duties on goods don’t need to be paid to the UK authorities until they are needed for manufacture or retail in the UK, or until they arrive at their final overseas destination.
How will a bonded warehouse benefit my business after Brexit?
Just some of the ways opting for bonded warehousing will benefit your business following Brexit include:
Once the UK has left the European Union all imports and exports will be subject to duty and this will have an immense impact on the goods supply chain. If your business currently benefits from free trade throughout the EU, you won’t have any experience of the administration associated with customs duties. No matter whether a no-deal Brexit or negotiated exit from the EU takes place, UK businesses will soon need to get to grips with the paperwork needed to clear your imports and exports. Using a bonded warehouse smooths this process considerably.
2. Cost efficiencies and improved cash flow
If you already outsource your freight to third-party warehouse provider then utilising a bonded warehouse can be extremely cost-efficient. It helps your business to save money, while also managing supply and protecting your high-value goods. In addition, of course, you benefit from a speedier customs clearance service.
The way that bonded warehousing helps cash flow is due to the fact that VAT payments and import duties are not paid on goods stored in bonded warehouses. These payments don’t come into play until the point the goods are transferred on or sold. Where you import goods to the UK with the intention of exporting them on, there will be no requirement for UK duties and you just need to pay duties in destination countries. Effectively this saves your business having to pay double duties and cuts your costs significantly.
Using a bonded warehouse is also a great way to keep control of supply, as you can import goods in advance to meet peak seasonal demand, like Christmas or Black Friday. This also means your business can take advantage of buying in advance when prices are at their lowest.
Finally, your legislative requirements for any inbound or outbound goods is met in full by your bonded warehouse supplier, so you never fall foul of any Customs & Excise requirements.
Browse the Amco Services website to find out more about our bonded warehouses, or get in touch today to discuss your requirements in more detail.