What are the benefits of in-bond?

Discussion in 'UK Wine Forum' started by Barry Smith, Jul 7, 2016.

  1. I've got some en-primeur wines which have arrived and are now in bonded storage with TWS. I'm just wondering whether to pay the tax now, or wait. It seems to me that with the current low interest rates that the tax payable is likely to increase at a far faster rate over the next few years than the money will sitting in a savings account. In other words it seems best to pay the tax now.

    Is there any benefit financially from paying the tax later?

    Cheers, Barry.
     
  2. Tom Cannavan

    Tom Cannavan Administrator

    Barry, I think most people keep wines in bond for two reasons: the storage facility, and because it can be easier to sell wine on in bond. I'm not sure many people do it in the hope that tax will change significantly, especially when storage charges will likely negate that anyway.
     
  3. I thought I was cunning keeping all my wine in bond, and indeed if one is at all likely to sell that's by far the best decision, but otherwise it hasn't been, and with every prospect of large rises in duty and VAT it is looking even worse!
     
  4. Simply put, if the wine is for drinking pay the tax now. If it's for selling later keep in bond.
     
  5. I always keep it in bond until I want to drink it.
     
  6. If,like me,you're a tad odd and actually like having your wine in your cellar for perusing/stroking purposes, you have no option but paying the duty/VAT. Otherwise advice above is spot on.
     
  7. All of the above.
    To illuminate the selling aspect a little more: if someone wants to buy your wine in, say, 10 years time they will have questions about provenance. Where did the wine come from? How has it been stored? If you can say that it is held in bond with TWS they will have complete faith that the wine came from the winemaker to TWS and has been properly stored and you will maximise your income on sale. Likewise if you bought the wine from many other reputable merchants and kept it in bond.
    The bond element is important because the purchaser can be assured that it has not left bond to be tampered with. If it is duty paid the risk of something being wrong is increased and so the price you can attain is diminished.
    So,
     
    Peter May likes this.
  8. Agree with all the above: Damian puts it very clearly.

    Personally, I've always followed Barry's logic and I normally pay the duty and VAT now, as it's all bought for drinking, not trading. The few cases that are stored ib are actually so, because C&B can't follow instructions, and I can't be bothered to change it now (plus they're ports, so if there were anything I might look to sell on, that's probably it).

    Though I also felt a brief moment of pain when I took a bottle of Pintas Douro out of storage recently, cracking open the OWC in the process. Just opening the OWC probably knocked 5% or more off its notional resale value! (Not actually opened the bottle yet: something to look forward to.)
     
  9. Wot Damian said, but also... Keeping it in bond is particularly important if there is any chance you might need to sell to someone a non-UK country, as whether or not you have paid UK duty will be irrelevant to the buyer when looking at the price.
     
  10. One thing not mentioned is that if you have paid the VAT and sell via a merchant/broker they will almost certainly not use the margin scheme so in effect won't pay you for the VAT element you already paid.
     
  11. Benefits:

    - easier to sell if I don't want to drink them.
    - out of sight, out of mind. At least the wines get a chance to reach maturity.
    - cheaper storage for me in the UK.
    - delay paying import duty and taxes.
     
  12. Also reduces the upfront cost of buying an expensive wine by approx. 20%
     
    Anthony Taylor likes this.
  13. And a cheap wine by even more. Blossom Hill is about £1 per dozen IB!
     
  14. :D
     
  15. I understand your 1st and 4th reasons, and the 2nd one is predicated on 1 and 4.

    But is it really the case that it's cheaper to store wine in bond than duty paid?
     
  16. As of 1 Jan 2016 the AWRS came in.

    You cannot sell after the duty point to a business without being registered.
     
  17. Of course you can Warren. But maybe you shouldn't.
     
    Warren EDWARDES likes this.
  18. Quite so. Reminds me of an overheard conversation in a café in Valencia a few years ago.

    English bloke to Spanish waitress: "Can I have a Latte!"

    Spanish waitress to English bloke: "You may have a café con leche."
     
    Leon Marks likes this.

  19. Unique for me as I am in Singapore. Storage cost in Singapore is almost double that of UK, so I keep most wines in the UK until they are ready for consumption.
     
    Leon Marks and Andrew Stevenson like this.
  20. Every now & then, you can find some absolute bargains buying an 'Investment Wine' duty paid - which is great if you're intending on drinking it.

    I just picked something up yesterday (a 2010 Bordeaux), duty paid, for around 30% cheaper than the next best WS-Pro price in bond. Finding DP wine for the same price as an IB wine is not that uncommon.
     
    Leon Marks likes this.
  21. Bonded warehouses are also good places to hide wine from the other half when you know that you've been buying too much! ;)
     
  22. Seems to be some conflation of storage and not paying the duty and tax. It's quite easy to pay the duty and tax and keep the wine in storage should you so desire!
     
  23. Ahem. Yes, quite.

    Though my wife seems to have figured out that whenever a new bottle pops up at home wrapped in branded paper, it probably cost a little bit more than it should have!
     
    Alex Jagger likes this.
  24. Tom Cannavan

    Tom Cannavan Administrator

    One final attempt to sum up then we can all relax :)

    Benefits of storing In-bond:
    Defer paying VAT and duty, so if a £10k case, deferring £2k+ of upfront cost until you want to drink
    Many collectors prefer to buy in-bond, so extra saleability
    The wine is professionally stored in ideal conditions (hopefully)
    If stored since release, provenance assured to potential buyers

    Benefits of storing Duty- and VAT-paid:
    The wine is professionally stored in ideal conditions (hopefully)
    If stored since release, provenance assured to potential buyers
     
  25. + 1 more benefit of VAT and duty paid : you have locked in your duty and VAT costs.

    Like many here, I cleared to DP quite a lot of personal stock which I intended to drink while VAT was 15%.

    This analysis does look a bit 2-D Tom, perhaps a full SWOT analysis would be in order ;-)
     
    Leon Marks likes this.

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