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Alarm as Customs culls ‘unused’ bonds

[ April 26, 2012   //   ]

HM Revenue & Customs (HMRC) has started to cancel bonds that have not been used for 12 months. The move is causing consternation among forwarders and logistics operators, who say such a move may restrict their ability to attract new business. Just because an operator has not used its bond recently does not mean that it will not do so in future and having a bond available can be an important tool in attracting new business, they say.

The United Kingdom Warehousing Association () said it had been having discussions with HMRC to try to clarify its policy on Customs Warehousing status.

UKWA, whose members operate over a million square feet of warehousing space across the UK, is concerned that HMRC is “aggressively targeting” bonded warehouse operators and revoking authorisation to store duty suspended goods where operators have not used the facility “for a relatively short period of time.”

UKWA contends that such a policy could have serious commercial implications for some of its member companies, UKWA contends.

IKWA chief executive officer Roger Williams said: “It seems, from feedback we have had from our members, that HMRC is now applying a ‘use it or lose it’ policy to storage facilities that have been granted Customs or Bonded Warehouse status.” One UKWA member received a letter from HMRC threatening to revoke its authorisation as a Customs Warehouse and, despite producing evidence of future potential contracts, it was having great difficulty in persuading HMRC that it should be allowed to maintain its customs warehouse authorisation, he said.

Roger Williams adds: “On behalf of our members we are asking if it is now HMRC policy to adopt a more aggressive and rigid approach to bonded warehousing status. Given that such a policy is unlikely to raise revenue for the exchequer but would limit a company’s operational flexibility, it is hard to understand the motivation for such an approach.”

Customs or bonded warehousing allows traders who import goods to delay paying duty and/or import VAT. Duty is not payable as long as the goods remain in the warehouse and it only becomes payable when the goods are released.

Roger Williams continues: “Having bonded warehouse status has always given third party storage companies a significant commercial advantage – for obvious reasons the ability to defer payment of duty is an attractive option to importers. The loss of bonded accreditation could, therefore, have a significant commercial impact on many businesses.”

He pointed out, also that before a company is granted customs warehousing status by HMRC, it has to make a significant investment in processes, procedures, systems and staff training. It would be very harsh if this investment were to be wasted because HMRC has decided to adopt a new stance.

Willaims added: “Of course, it is right that companies are regularly checked to ensure that they have processes and procedures to store goods under bond in the correct and legal way, but we do not expect HMRC to add unnecessary extra burdens to businesses in what are already extremely tough trading conditions.

“We hope HMRC will clarify its exact position so that those UKWA members that have customs status can take any steps needed to ensure that they retain it.”

Middlesbrough’s AV Dawson is one company that would be affected by HMRC’s policy. Managing director Gary Dawson said: “It’s frustrating. We have some customers who say they would like to use it in future, and it seems to betray a lack of understanding of commercial issues by HMRC. Reactivating a bond once it has lapsed could be expensive and time-consuming.”

 

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