A Customs Warehouse allows traders to store goods with suspended duty or import VAT payments. You must pay duty once goods leave the Warehouse, unless they are re-exported or moved to another Customs procedure. 

HMRC must authorise you to operate a Customs Warehouse or be authorised as a ‘Depositor’ in someone else’s Warehouse. 

When goods are in a Customs Warehouse, they are considered to have never landed in that country. An excellent way to explain this is to consider goods moving by sea.  If the goods are shipped from South Africa and come straight off a vessel into a Customs Warehouse in Holland, they are regarded as not being landed in Holland from a Customs perspective.    Even though they do physically land in Holland, the goods are still South African.  If they are exported to the UK from the Warehouse in Holland, they remain of South African origin. 

There is often some confusion around this; I once dealt with the above scenario. The UK company bought some fruit juice from a Dutch brokerage, which they had imported into a Customs Warehouse operated by a third party in Holland.  The Dutch broker managed to get a Preference certificate (EUR1) from Holland to say the goods were of South African origin. 

The UK forwarder, who represented the UK company as a direct representative, then arranged to move the goods to the UK. He used this Dutch EUR1 to claim Preference under the EU-UK trade and cooperation agreement and did not pay duty. 

So, what were the issues here? 

• Firstly, the Dutch broker acted incorrectly; they should have never issued, or been able to get, a Preference certificate from Dutch Customs to export South African goods in a Customs Warehouse in NL to the UK. 
• The goods had not been altered, so there was no possibility that Preference could be claimed under the UK/EU TCA, and the Forwarder should have been aware of this. He was arranging the transport from the Customs Warehouse to the UK, so he could not claim ignorance that the goods were being removed from a Customs Warehouse, as there was supporting documentation. 
• The Forwarder should have gained further information from the UK principal who instructed him to clear the goods in the UK before he did anything if he wasn’t unequivocal. As the UK importer issued no specific instructions to him and gave him autonomy over the movement, basically, he made what could be considered a fraudulent claim of a trade agreement, which did not apply to these goods in the UK importers name. 
• If this hadn’t been picked up by the UK importer's compliance team and had been discovered in an HMRC audit, not only would the UK importer have to pay the duty, but they would potentially have been fined, as the Forwarder was a direct representative of the UK importer. 
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So, what should have been the correct procedure to remove the goods from the Customs Warehouse and claim Preference under a trade agreement? 

• Firstly, the broker who was the seller of the goods to the UK entity should have approached the manufacturer of the goods in South Africa to get a Preference certificate or make an Origin declaration, as appropriate, to confirm that the goods met the preferential origin rules of the UK- SOUTH AFRICA trade agreement because the goods were being exported to the UK from a Customs Warehouse so were not considered as having landed in NL. 
• Secondly, the operator of the Customs Warehouse should have obtained a “certificate of non-manipulation” from Customs to confirm that the goods had not been altered in any way whilst they were in the Customs Warehouse. 
• The UK forwarder could then clear the goods on arrival to the UK and claim the preference of the UK – SA trade agreement because he had followed the correct procedure and had the proper documentation to support his claim.