A customs warehouse is an HMRC authorised site where imported goods can be stored with Customs Duty and import VAT suspended. The charges only become due if the goods are released to free circulation in the UK, and nothing is payable if they are re exported or moved to another customs procedure other than authorised use. A public warehouse stores other people’s goods, while a private warehouse stores the operator’s own.

What does customs warehousing do?

Customs warehousing is one of the storage customs special procedures. HMRC’s Customs Technical Handbook describes it as letting importers store goods while suspending duties and import VAT, after which the goods can be declared to another customs procedure, re exported or released to free circulation, at which point duties and VAT become due. The site is a defined location and can be a whole building, part of a building, or a silo or storage tank.

The cash flow benefit is the main attraction. An importer who brings in a year’s stock but sells it over twelve months only pays duty and import VAT on each batch as it leaves for the UK market. Goods sold abroad from the warehouse never bear UK import charges at all.

A warehouse can also hold goods:

  • where licences or other documents are not yet available at import;
  • that were imported to another special procedure and are waiting to be re exported;
  • on which customs duty is not due but import VAT is; and
  • in free circulation that are the subject of a rejected imports claim.

What is the difference between a public and a private warehouse?

Public customs warehouse Private customs warehouse
Whose goods Other businesses’ goods, known as depositors The operator’s own goods
Warehousekeeper and depositor Different people The same person
Authorisation Warehousekeeper authorised by HMRC; depositors need no authorisation The business must be authorised as warehousekeeper
Extra application evidence Letters of intent from customers with annual duty and VAT suspension figures, to show economic need Business need for the warehouse

Depositors do not need to own the goods, but they take on liability for any duty and import VAT that becomes due. The depositor must be established in the UK. An overseas owner can either use a UK private warehousekeeper, who becomes liable for the charges, or appoint a UK established indirect representative to deposit goods in a public warehouse. The indirect representative is then jointly and severally liable with the owner, as explained in our guide to direct and indirect representation.

Who can become a warehousekeeper?

To be approved, HMRC says you must be established in the UK, have an EORI number, be financially solvent, have a good customs compliance record, prove a business need, be able to make declarations or use an agent, and keep inventory records. You must provide a guarantee for duty and VAT unless you are an Authorised Economic Operator or can meet the Authorised Economic Operator conditions.

HMRC recommends applying at least 2 months before you want to start. The application has to include written procedures for goods entering and leaving, screenshots of the warehouse or duty management system, site plans showing a clearly marked customs area, the customs procedure codes you will use, commodity codes to at least 6 digits, a personnel chart, any lease and a health and safety policy. HMRC may arrange a site visit.

How are goods put into and taken out of the warehouse?

Goods enter on a full import declaration or a simplified declaration using entry in the declarant’s records or the simplified declaration procedure. The depositor must send the goods directly to the warehouse named on the declaration within 5 working days of customs clearance, give the warehousekeeper the declaration details and check the warehouse is approved for the type of goods.

Goods leave in one of these ways:

  • Release to free circulation. Duty and import VAT become payable. The date HMRC accepts the entry fixes the duty rate, whenever the goods physically leave, and goods must not be removed until clearance is confirmed.
  • Another special procedure. A single declaration to inward processing, temporary admission or authorised use discharges the warehouse procedure.
  • Export or re export directly from the warehouse, with no UK charges.
  • Another warehouse. Moves within the same authorisation need no declaration, though records must be kept; moves between different authorisation holders need a declaration by the receiving depositor.
  • Supervised destruction, with prior approval from the supervising office.

How are duty and import VAT worked out on release?

On release you need the quantity, value and tariff classification of the goods. If there was a sale for export before the goods entered the warehouse, the customs value is based on that sale; if not, a sale in the warehouse can be used. Duty and exchange rates are those at removal. A tariff preference can be claimed on removal if a valid proof of origin was recorded on receipt and is not more than two years old, which is important for goods relying on rules of origin. Anti dumping or countervailing duty in force on the date of removal applies.

Import VAT is due when the goods go into free circulation, and VAT registered businesses can account for it using postponed VAT accounting on the removal declaration. Sales of goods while they are in the warehouse are not charged supply VAT unless they are retail sales.

Can you work on goods in a customs warehouse?

Only usual forms of handling are allowed. These preserve the goods, prepare them for distribution or sale, or improve their appearance or marketability. HMRC says an operation is allowable only if it does not change the nature of the goods, does not improve their performance, is not solely to increase their value and is relatively limited. Significant repairs, such as panel beating a damaged car, are not allowed and need inward processing instead. If usual forms of handling will be a regular activity, it should be set out in the authorisation application.

What does a worked example look like?

Illustration only. A wine merchant imports 10,000 bottles of non UK wine into a public customs warehouse in January. In March it releases 2,000 bottles to free circulation for UK customers and pays duty and import VAT on those bottles only, at the rates in force when HMRC accepts the March declaration. In May it sells 3,000 bottles to a buyer in Norway and exports them straight from the warehouse with no UK import charges. The remaining 5,000 stay in the warehouse with charges still suspended. Excise goods such as wine also have excise rules, which are outside the scope of this page.

What mistakes cause duty bills?

  • Removing goods before HMRC confirms clearance, or before a valid import licence is produced for licensed goods.
  • Not recording proof of origin on receipt, which blocks a preference claim on release.
  • Carrying out processing that goes beyond usual forms of handling.
  • Poor stock records, so losses in the warehouse cannot be backed by the robust audit trail HMRC expects.
  • Applying for a public warehouse without customer letters of intent showing economic need.
  • Using the wrong commodity code on entry, so the goods fall outside the authorisation or the wrong duty is suspended.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 19 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.