What are the benefits of in-bond?

Barry Smith

Barry Smith

Location
London
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.
 
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.
 
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!
 
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,
Gareth J Welch said:
Simply put, if the wine is for drinking pay the tax now. If it's for selling later keep in bond.
Click to expand...
 
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.)
 
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.
 
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.
 
Chiu Lin said:
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.
Click to expand...

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?
 
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."
 
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.
 
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!
 
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
 
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