CASK STORAGE & OWNERSHIP

Whisky held under duty suspension is kept within authorised excise-warehouse arrangements. The warehouse is responsible for the physical custody and control of the goods under the conditions of its authorisation, while the commercial ownership or holding arrangement is evidenced through the relevant transaction and warehouse records.

This is why storage should not be treated as an afterthought. The warehouse location, the account structure and the documentary process all form part of the due-diligence trail for a cask.

For a wider explanation of the warehouse system, see HMRC bonded storage explained.

Physical custody answers the question: where is the cask and who is responsible for storing it? Ownership records answer a different question: what documentary trail connects the investor to that specific cask and how has the transfer been recorded?

A warehouse may physically hold thousands of casks on behalf of different owners or account holders. The fact that a cask is stored in a legitimate warehouse is therefore important, but an investor should still understand how their individual cask is identified and how their interest in it is recorded.

We work with Elite Wine & Whisky Storage Ltd for our dedicated cask storage arrangement, with casks held at The Queen Elizabeth Bond near Edinburgh. Clients can also arrange to visit the facility and see their casks, subject to the warehouse’s arrangements and availability.

Following transfer, the ongoing storage arrangement is between the owner and the relevant bonded warehouse. This provides a useful distinction between UKV’s role in sourcing and arranging the transaction and the warehouse’s ongoing responsibility for custody and storage.

Clear cask ownership is best supported by a consistent documentary trail. This normally includes the purchase documentation, the relevant transfer instruction and the warehouse or account records associated with the cask. Rather than relying on one document in isolation, these records should identify the same cask and be retained together.

Useful records can include:

• the purchase agreement or contract identifying the cask
• the invoice or receipt for the commercial transaction
• a Delivery Order or other transfer instruction used in the relevant warehouse process
• warehouse confirmation, account information or holding records available under the arrangement
• storage invoices and correspondence
• regauge, sampling or other cask-condition records where applicable
• subsequent transfer paperwork if the cask is later moved or sold

An invoice can show that a transaction took place, while a regauge can provide information about the cask’s current contents. Neither performs the same role as a transfer instruction or warehouse record, so the documents should be read together rather than treated as interchangeable.

A Delivery Order is an important document in many whisky-cask transfers. In practical terms, it is used to identify the cask and instruct the relevant warehouse process to record a transfer from one party or account arrangement to another.

Each cask supplied through our arrangement comes with a Delivery Order as part of the transfer documentation. Clients should check that the document identifies the correct cask and retain it alongside the appropriate purchase and warehouse or account records available once the transfer has been processed.

Read the fuller explanation in What Is a Delivery Order?.

Storage and insurance are ongoing ownership costs and should be checked before buying. UKV’s terms state that, following transfer, the owner is directly responsible for the storage and insurance costs and that warehouse charges are invoiced at the prevailing rate under the warehouse’s terms.

UKV’s whisky FAQ says the warehouse may provide insurance as part of its storage charge or insurance may be offered through an independent specialist provider. The applicable arrangement, insured value, exclusions and current charges should therefore be confirmed in writing for the specific cask and storage account.

Current UKV information: Storage & Insurance and UKV Terms & Conditions.

Good record-keeping does not need to be complicated. We recommend keeping the core purchase, transfer, warehouse and storage documents together so there is a clear record throughout the life of the cask.

• Keep your purchase documentation, Delivery Order and relevant warehouse records together.

• Check that the cask number and other key identifiers are consistent across the documents.
• Retain any confirmation or account information supplied after the transfer has been processed.
• Keep storage invoices, insurance information and important warehouse correspondence.
• Retain regauge, sampling and other cask-condition records where applicable.
• Confirm current storage and insurance charges when required, as charges may change over time.

Whisky can be moved between approved arrangements, transferred or removed from duty suspension, provided the relevant warehouse and excise procedures are followed. If whisky is removed from duty suspension, duty and tax consequences may arise, while bottling, handling, transport or other charges may also apply.

For a private owner, the important point is not to assume that storage or movement rules are automatic. Discuss the intended action with the warehouse and obtain appropriate professional tax or legal advice where needed.

Good storage and ownership records are useful throughout the life of the cask, not only when it is bought. A future buyer, broker, bottler or other trade participant may need enough documentation to identify the asset and establish that the proposed transfer can be properly instructed.

Keeping the purchase, transfer, warehouse, storage and cask-condition records together can make later due diligence easier and reduce avoidable delays when an exit is being considered.

When you are ready to consider an exit, see How to Sell a Whisky Cask and Whisky Cask Exit Strategies. For the wider downside considerations, read Risks of Whisky Cask Ownership.