|HMRC Reference:Notice 702/8 (October 2012)||View Change History|
This notice contains information previously contained in Notice 702/9 Warehouses and Free Zones which has been cancelled and replaced by Notice 702/9 VAT: Import Customs Procedures.
"Paragraphs 5.1 and 5.2 have the force of law under Regulations 145B(1) and 145C of the VAT Regulations 1995."
This notice gives information on the VAT treatment of goods entered into, supplied within and removed from fiscal warehouses.
"This notice has been updated to reflect the legal status of the certificates reproduced at paragraph 5.1 and 5.2.
You can access details of any changes to this notice since January 2011 either on our website, go to hmrc.gov.uk or by phoning our VAT Helpline on 0300 200 3700.
You should read this notice if you trade in any of the eligible commodities listed in paragraph 2.3 of this notice, or if you provide storage facilities for any of these commodities.
A fiscal warehouse is a regime where certain commodities in free circulation within the EC can be traded VAT-free, subject to the conditions described in section 2. Goods are in free circulation if they are produced in the EC or, in the case of imported goods, all duties taxes and levies due at importation have been paid.
What is suspended
Specified commodities that are in free circulation (see paragraph 2.3)
Supply VAT - this is VAT which is charged on the supply of any goods or services that takes place in the UK, made by a taxable person in the course of any business carried out by that person.
Supply VAT is normally paid when the goods are removed from the regime.
The term 'EC' as used in this notice refers to the VAT territory of the European Community, which is different from its customs territory. The countries and territories which make up the VAT territory of the EC are listed in section 3.
Goods removed from the Isle of Man to the UK are not treated as an importation as long as:
The Channel Islands are part of the customs territory of the EC but not part of its VAT territory. The territories which share this status are often called 'special territories' and they are listed in section 3.
Goods you receive from the Channel Islands or other special territories are imports for VAT purposes and are, in principle, treated in the same way as other imports at the time of importation. You will find further information about import procedures (including some simplified procedures) for goods received from the Channel Islands and other special territories in the Customs and Excise Integrated Tariff and Notice 702 VAT Imports.
If you disagree with any decision made by HM Revenue & Customs, you can ask for it to be reconsidered by the office where that decision was made. You should certainly do so if you can provide further relevant information, or if there are facts which you think may not have been fully taken into account. If you are still not satisfied, you may be able to appeal to an independent Tribunal. There are time limits for doing this.
If you do not agree with the result of our reconsideration you can appeal to the First-Tier Tribunal to decide the matter. There is more information about what you can do if you disagree with our decision in a HMRC factsheet and customer guidance which can be found on our website.
Fiscal warehousing provides a regime which enables certain EC goods to be traded VAT free, subject to the conditions described in the rest of this notice. The relevant law is set out in paragraph 1.4.
This section explains in detail what the regime is intended to achieve, and gives guidance on:
Fiscal warehousing is a regime under which certain specified commodities may be placed in a notified warehouse and traded by businesses which are not required to be VAT registered if that is their only business activity within the UK.
VAT on the supplies of commodities both:
is relieved and accounted for when the commodities are removed from the regime.
VAT on certain services made within a fiscal warehousing regime are also relieved and accounted for when commodities are removed (see paragraph 2.17).
Both EC origin and non-EC origin commodities in free circulation are eligible for the regime.
Fiscal warehousing creates a trading environment for eligible EC commodities compatible with the VAT-free trading available in excise warehouses and customs warehouses. Excise and customs warehouse premises may also be used for fiscal warehousing, but separate authorisation is needed for the fiscal warehousing regime. Retail sales are not allowed within a fiscal warehousing regime.
Any of the commodities contained in the following table are eligible to be placed in a fiscal warehouse. These commodities are eligible for trading in and transfer between EC fiscal warehousing regimes.
Description of goods
Combined nomenclature code of the European Communities (Commodity Code)
ex 8112 91ex 8112 99
1001 to 1005
Oil seeds and oleaginous fruit
1201 to 1207
Grains and seeds (including Soya beans)
1201 to 1207
Coffee, not roasted
0901 11 00
Cocoa beans, whole or broken, raw or roasted
Rubber, in primary forms or in plates, sheets or strip
Chemicals in bulk
Chapters 28 and 29
Mineral oils (including propane and butane, also including crude petroleum oils)
Platinum (Palladium, Rhodium)
7110 11 00
Vegetable oils and fats and their fractions, whether or not refined, but not chemically modified
1507 to 1515
Non-eligible commodities may be stored in a place which is a fiscal warehouse, but such goods cannot be subject to a fiscal warehousing regime or benefit from the conditions of fiscal warehousing.
Before you can operate a fiscal warehouse you must apply to HM Revenue & Customs for authorisation. You will have to be able to satisfy certain criteria to ensure that your revenue record and internal accounting procedures are of a sufficiently high order to guarantee the integrity of the regime. If you currently operate any Departmentally approved warehousing system you must still apply for a separate authorisation for fiscal warehousing, although satisfactory operation of an existing warehouse will be taken into account when assessing your application for fiscal warehousing authorisation.
You must complete a letter of application as described in section 6. You can get the address to send it to from our VAT Helpline - see paragraph 1.2. Once we are satisfied that you can fully comply with fiscal warehousing requirements we will send you a letter of authorisation, which will be conditional on your acceptance of any conditions we believe to be appropriate. The authorisation will be granted without a time limit, except in the case of provisional authorisations (see paragraph 2.9).
Once you are authorised, you may request a change of approval conditions by contacting our VAT Helpline well in advance, explaining the reason for the required change. In particular you should notify Customs of any new premises you intend to use for fiscal warehousing. If we agree to your request we will confirm it in writing. You should keep this confirmation together with your original letter of authorisation. We may also change the authorisation conditions ourselves, if we consider that a change in you circumstances merits this. We will of course notify you in advance of any authorisation changes we may consider appropriate, and you have an automatic right of appeal.
Before we can approve any application to operate fiscal warehousing, the following criteria must be met:
We may refuse authorisation where any of the required criteria are not met. If we do we will write to you setting out the reasons for our refusal and explaining how you can appeal against our decision. This allows for an initial local review of the decision and then, if necessary, an appeal to a VAT and Duties Tribunal. If you disagree with the decision and wish it to be reviewed locally by a member of staff not connected with the decision, you should apply in writing within 28 days of receiving the letter of refusal. This review does not affect your right to appeal to a VAT and Duties Tribunal.
If you wish to appeal directly to the Tribunal you should phone our VAT Helpline. You also have the right to appeal against any conditions which we may have imposed on your application for authorisation.
Where we cannot approve your request for authorisation immediately, for example because you have not yet secured the necessary premises, we may give you a letter of provisional consent to establish a fiscal warehouse as long as the outstanding criteria are met within a specified period of time. If any condition is not met within the deadline, the application will lapse and a fresh application must be submitted.
Once you are authorised to operate a fiscal warehouse, you cannot transfer your authorisation to another person or company. If you sell your business as a going concern, the prospective new owner must apply for authorisation in their own right and we will consider this on its merits. The new owner’s application must be accompanied by a written declaration from you confirming the date on which your authorisation will cease (the date of the transfer of going concern).
To cancel your authorisation you must give us advance notice in writing, stating the date by which all goods will cease to be traded and removed from the warehousing arrangements. You must ensure that VAT is accounted for on all such removals in accordance with paragraph 2.19.
We can revoke your authorisation at any time for any reasonable cause, for example if you do not comply with any of the conditions of the authorisation. Except in very exceptional circumstances we will notify you in advance of any intended revocation, and you will always have a right to appeal. Where we withdraw your authorisation, any goods held in your regime will be treated as though they had been removed by the proprietor at the time of withdrawal and VAT will be due in accordance with paragraph 2.19.
As a fiscal warehousekeeper you:
Any supply of goods, or acquisition of goods from another Member State, destined for entry to a fiscal warehouse may be relieved from VAT.
If you are the purchaser and wish to obtain the relief, you must provide the seller of the goods with a certificate stating that you intend to place the goods in a fiscal warehouse.
If you are the acquirer you must produce and retain a certificate stating that the acquired goods are to be fiscally warehoused. Section 5 shows examples of what is required.
To be eligible for fiscal warehousing, commodities must be of a kind described in paragraph 2.3, and must be in free circulation as set out in paragraph 2.4.
Supplies of goods which are in a fiscal warehouse are outside the scope of UK VAT. There is no requirement to account for VAT to Revenue & Customs on such transactions, nor is there any direct Customs control over movements or transfers of goods whilst within the fiscal warehouse regime.
When goods are removed from the regime the amount of VAT payable will correspond:
Any VAT due must be accounted for in accordance with paragraph 2.19. In order to be eligible for relief, supplies of unallocated goods (commodities warehoused in bulk storage containers that cannot be readily identified to a particular owner) within, or intended to be placed within a fiscal warehousing regime are treated as supplies of goods and not as supplies of services.
Services which may be zero-rated are supplies of allowable physical services within the fiscal warehouse which would otherwise be taxable at the standard rate, for example storage charges.
Services which may not be zero-rated are brokerage, agents fees and transport between warehouses. For goods held in a fiscal warehouse, supplies of the usual forms of handling that are available to goods in a customs warehouse, may be relieved from VAT (these are listed in section 4). You will need to obtain written authority by contacting our VAT Helpline if you wish to obtain relief on supplies of services which exceed these specified operations.
On removal of the goods from the warehouse, any VAT relieved on each supply of services relating to those commodities made after the last sale in warehouse of such commodities must be accounted for, together with the VAT due on the relieved supply of the commodities. For example the commodity may be divided up into smaller packages by a simple operation that does not change its nature. The value of the service that is performed whilst the commodity is still relieved from VAT in the warehouse, must be added to the value of the supply when it is finally sold and removed from the warehouse.
Value of re-packaging service
Value of final supply of commodity on removal from warehouse
Value of total final supply
VAT due on total final supply
£150 x 20% =
Where, as a result of an operation carried out on eligible commodities, the resulting commodities are no longer eligible for fiscal warehousing, they are treated as having been removed and VAT will become due in accordance with paragraph 2.19.
If your only business activity is the supply of goods within a fiscal warehousing regime you have no liability to register for VAT, but you may do so voluntarily if you wish under VAT Act 1994 Schedule 1(10). Your liability to register for other business activities is not affected by either the value of supplies made in a fiscal warehouse or the value of deemed supplies of relieved services accounted for by the remover of the goods.
VAT becomes due when commodities finally leave the fiscal warehousing regime. The amount of VAT due corresponds to the amount of tax which would otherwise have been due on the final supply of goods in the warehouse, plus the amount of tax which would have been applied to any of the relieved supplies of services relating to those goods effected after that final supply.
The person liable to pay the VAT on removal is the person who causes the goods to cease to be covered by the regime.
Where goods are acquired from another Member State and subsequently removed from warehouse without being sold within the warehouse, acquisition VAT must be accounted for in the normal way as explained in Notice 725 The Single Market.
If you remove your goods from a fiscal warehouse in any of the following situations, VAT is not due on the removal of the goods.
(a) Removals to home use:
Where goods are exported outside the EC, standard export procedures apply. Such removals must be supported by normal evidence of export. Any associated relieved supplies of services do not become taxable where goods have been exported.
(c) Despatches to other Member States
Where goods are removed in the course of an intra-EC supply, normal Intrastat and intra-EC supply/acquisition rules apply for VAT registered traders. Relieved services are not taxed on removal to another Member State but should be reflected in the value of the supply.
(d) Transfer to another UK fiscal warehouse
Such transfers can only be relieved from VAT where effective control over the goods is exercised by the despatching warehousekeeper. The warehousekeeper must obtain from the receiving warehousekeeper a written undertaking that they will comply with the regulations concerning transfers, and a certificate confirming that those regulations have been complied with (see paragraph 2.22(e)).
(e) Temporary removals
Authorisations (either general or specific) must be obtained through our VAT Helpline. Goods must be returned to the original site or another covered by the authorisation. In order to obtain authorisation, the remover must state the length of time the goods will need to be removed for and for what purpose the removal is required. Such removals must be notified to the warehousekeeper who is responsible for ensuring that any temporary removals meet the prescribed conditions.
(f) VAT free sampling
Small quantities of commodities of a negligible commercial value can be removed for this purpose under a simplified removal scheme. The amount and approximate value of the commodity to be removed must be detailed in the authorisation given by our VAT Helpline. Such removals must be notified to the warehousekeeper, who is responsible for ensuring that they meet the prescribed conditions.
Subject to the normal rules, you can reclaim as input tax any VAT paid as a result of the removal of goods from the fiscal warehouse, provided those goods are used for the purpose of your business. This claim for input tax is normally made on the same VAT return on which the VAT due on the removal is declared as output tax.
(a) Receipts into a fiscal warehouse
The warehousekeeper must allocate a unique reference number to each consignment received and record the nature and quantity of goods on entry and the date of receipt. The record must also show delivery note details for all goods received in warehouse. Non-eligible goods entered for storage must also be identified in the records.
(b) Stock records
Your system (manual or electronic) must be able to show the location of the goods at any given time. Where fiscally warehoused goods are co-located with other goods held under other warehousing regimes and other goods in free circulation, the stock records must be capable of separately identifying the different regimes.
(c) Removals from warehouse
For all removals from warehouse, stock records must contain details of the owner, quantity and type of commodities, the date of removal and details of either the remover’s VAT registration number or a stamped copy of form VAT 150 (see paragraph 2.12). Before removal, and in order to establish both value and ownership, unregistered proprietors must produce to the local Entry Processing Unit a copy of the invoice or warrant used to purchase the commodities. In the case of a series of purchases, the most recent purchase should be used. They must then produce to the fiscal warehousekeeper, a stamped copy of form VAT 150 and the necessary commercial documentation to establish ownership. Registered removers must also establish ownership but need only give an undertaking to account for the VAT payable on any removal on the appropriate return. In the case of a temporary removal, details must be kept of the approval given by Customs and of the removal and return of goods. Similar details are also needed for removal of goods of negligible value. With the written permission given by Customs, damaged or outdated goods held under fiscal warehousing can be destroyed and the stock record adjusted accordingly. VAT is due on the removal of any scrap or waste which still has an economic use, based on the open market value of the goods removed.
(d) Removal in the course of an export or intra EC supply
The warehousekeeper must obtain proof of ownership and the VAT registration number of the remover in the normal way. The remover is entitled to zero rate the removal in both cases, but must include the value of any relieved supply of services in the value of a removal in the course of an intra EC supply. The warehousekeeper’s records must include documentary evidence to show the goods have been exported.
(e) Transfer of goods from one fiscal warehouse in the UK to another
In order to exercise effective control over goods transferred from one fiscal warehouse in the UK to another, the despatching warehousekeeper remains responsible for the goods until receipted documentation is received from the receiving warehousekeeper acknowledging receipt of, and liability for, the goods. The records must also show the address of the fiscal warehouse to which the goods in question are transferred.
(f) Transfer of goods from a fiscal warehouse in the UK to one in another Member State
Similar controls to those maintained for goods transferred to another fiscal warehouse in the UK must be exercised by warehousekeepers when goods are transferred to a fiscal warehouse in another Member State. Such transfers can only be relieved from VAT where a corresponding regime exists in the Member State of destination. The warehousekeeper’s records must show the address of the place in the other Member State to which the goods in question are transferred.
(g) Failure to provide documentation
Where the proper documentation is either not received by the warehousekeeper:
the warehouse record must be adjusted to show the goods as having been removed from the regime on the day they left the fiscal warehouse premises. The record must also show the remover as being the person on whose instructions the warehousekeeper allowed the goods to leave the warehouse.
(h) Deficiencies of goods
Where in any approved warehouse a deficiency is discovered in the stock approved for fiscal warehousing, VAT becomes due on the deficient goods as if they had been removed to home use. This depends on whether the goods were entered VAT paid or not and whether they were subsequently sold in the warehouse or not. See paragraphs 2.19 and 2.20.
The following countries and territories are within the EC fiscal (VAT) area:
There are some special territories which are within the EC customs area but outside the EC fiscal (VAT) area:
Goods entering the UK from these places are treated for VAT purposes as imported goods (paragraph 1.9).
Unless otherwise specified, none of the following forms of handling may give rise to a different eight-digit tariff commodity code (that means they must not produce new product).
(a) Ventilation, spreading out, drying, removal of dust, simple cleaning operations, repair of packing, elementary repairs of damage incurred during transport or storage insofar as it concerns simple operations, application and removal of protective coating for transport.
(b) Stocktaking, sampling and weighing of the goods.
(c) Removal of damaged or contaminated components.
(d) Conservation by means of irradiation or the addition of preservatives.
(e) Treatment against parasites.
(f) Any treatment by lowering the temperature, even if this results in a different eight-digit tariff commodity code.
(a) Stemming and/or pitting of fruit.
(b) Assembly and mounting of goods, only if this concerns the mounting onto a complete product of accessories which do not play an essential role in the manufacture of the product, even if this results in a different eight-digit tariff commodity code for the mounted goods or accessories.
(c) Desalination, cleaning and butting of hides.
(d) Addition of goods, of one or more different types of goods, in as long as this addition is relatively small and does not change the nature of the original goods, even if this results in a different eight-digit tariff commodity code for the added goods, the added goods could also be products which were placed under the warehousing regime, or which were placed in the free zone or free warehouse.
(e) The dilution of fluids, even if the result is a different eight-digit tariff commodity code.
(f) The mixing between them of the same kind of goods, with a different quality, in order to obtain a constant quality or a quality which is requested by the customer, without changing the nature of the goods.
(g) Dividing the goods if only simple operations are involved.
(a) Sorting, mechanical filtering, classification and shifting.
(b) Adjusting and regulation.
(c) Packing, unpacking, change of packing, decanting and simple transfer into containers, even if this results in a different eight-digit tariff commodity code.
(d) The affixing and altering of marks including seals, labels, price tags or other similar distinguishing signs – however this operation must not change the apparent origin of the goods.
(e) Testing, adjusting and putting into working order of machines, apparatus and vehicles, if only simple operations are involved.
(f) Testing in order to control the compliance with European technical standards.
(g) Cutting up and breaking down of dried fruits or vegetables.
(h) Anti-rust treatment.
(i) Reconstruction of the goods after transport.
(j) The raising of temperature in order to allow the goods to be transported.
(k) The ironing of textiles.
(l) Electrostatic treatment of textiles.
"THE FOLLOWING TEXT HAS THE FORCE OF LAW"
Information to be indicated:
I…………………………………………………………...…….. (full name) …………………………………………………..…(status in company) of ……………………………………………………..(name and address of company) declare that ……………………………...(name of company) intends to enter to the fiscal warehousing regime at the fiscal warehouse shown below on (date), or within days commencing today, the goods indicated below:
I certify that the supply of goods/acquisition is eligible to be relieved from VAT under the following provisions of the VAT Act 1994 [delete as appropriate]:
sections 18 B(2)(d)/18B(3) (purchases) or sections 18B(1)(d)/18B(3) (acquisitions).
Note: You should be aware that there are severe penalties for making a false declaration. If there is any doubt about the eligibility of the goods or about the fiscal warehouse to which they are being sent, you should contact our VAT Helpline on 0300 200 3700.
A copy of the. above declaration should be filed with the supplier’s invoice and a copy of the delivery note
"THE FOLLOWING TEXT HAS THE FORCE OF LAW"
Information to be indicated:
I ………………………………………………………………….(full name) ……………………………………………………..(status in company) of ………………………………………….(name and address of company) declare that the goods shown below are subject to a fiscal warehousing regime at the place indicated below:
and that the following services are to be performed on the goods in the fiscal warehouse:
I certify that the supply of services is eligible to be zero-rated for VAT purposes under section 18 C (1) of the VAT Act 1994.
Note: You should be aware that there are severe penalties for making a false declaration. If there is any doubt about a supply being entitled to zero-rating you should contact our VAT Helpline on 0300 200 3700 before signing and sending in the certificate to Customs.
A copy of the certificate should be filed with the supplier’s invoice which should refer to s18C(1) of the VAT Act 1994 to be eligible for zero-rating.
You must provide the following details where appropriate:
(a) Name or Business Name, Address & VAT Number (see Note 1).
(b) Address(es) & Description(s) of storage facilities. The Commissioners may, in considering your application, take into account the suitability of notified premises.
(c) Details of any authorised UK duty suspensive regime which you operate.
(d) Brief description of stock records and accounting system and place where stock records will be kept (see Note 2).
(e) Nature of the goods to be stored, either specific goods or “all eligible goods”. Details of eligible goods are set out in paragraph 2.3.
(f) Details of common storage of different categories of goods which may be in free circulation or under other customs procedures.
(g) Details of temporary removals or possible VAT free sampling. You must also indicate whether general authorisation will be required or whether an application will be made each time goods are to be temporarily removed.
(h) Details of documents you are attaching, for example, supplementary papers detailing records that will be kept.
(i) The application must be signed by a director, proprietor, partner or duly authorised person.
1. Not required if application is on company headed notepaper giving these particulars.
2. Please give details of:
(a) Documentation to be used to enter goods to the regime.
(b) Stock control system.
(c) Point at which goods will be deemed to have left the fiscal warehousing regime and are therefore liable to VAT on removal.
(d) Documentation to be used to transfer goods to another UK fiscal warehouse.
(e) Documentation to be used to transfer goods to a fiscal warehouse in another EC Member State.
Your Charter explains what you can expect from us and what we expect from you. For more information go to www.hmrc.gov.uk/charter
If you have any comments or suggestions to make about this notice, please write to:
HM Revenue and Customs
Subject Matter Expert team
VAT Process Owner Team
1st Floor Regian House
Please note this address is not for general enquiries.
For your general enquiries please phone our Helpline 0300 200 3700.
If you are unhappy with our service, please contact the person or office you have been dealing with. They will try to put things right. If you are still unhappy, they will tell you how to complain.
If you want to know more about making a complaint go to hmrc.gov.uk and under quick links, select Complaints and appeals.
HM Revenue & Customs is a Data Controller under the Data Protection Act 1998. We hold information for the purposes specified in our notification to the Information Commissioner, including the assessment and collection of tax and duties, the payment of benefits and the prevention and detection of crime, and may use this information for any of them.
We may get information about you from others, or we may give information to them. If we do, it will only be as the law permits to:
We may check information we receive about you with what is already in our records. This can include information provided by you, as well as by others, such as other government departments or agencies and overseas tax and customs authorities. We will not give information to anyone outside HM Revenue & Customs unless the law permits us to do so. For more information go to hmrc.gov.uk and look for Data Protection Act within the Search facility.
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