No. In the UK, HMRC (HM Revenue and Customs) regulates the buying and selling of cask whisky.
Hackstons ensures that we are compliant to as many of the FCA’s regulations as possible, conducting various anti-money laundering checks (AMLs) and ensuring our customers will not be put at financial risk through Know Your Customer checks (KYCs). Our compliance team will carry out these reviews before you are able to purchase any scotch cask for investment.
Every time a cask is moved to a different warehouse or the owner of record is changed, the HMRC accredited cask storage warehouse uses a document called a Delivery Order, often simply referred to as a ‘D.O.’ or ‘DO’, as a receipt that documents the transaction. Delivery orders vary in appearance from warehouse to warehouse, but must include the warehouse letterhead, details of the transaction and a signature from the warehouse keeper.
Hackstons is happy to provide a delivery order (DO) for all clients with an account with a warehouse. If the stock is not currently lying at the warehouse in which you hold an account, we can arrange for your stock to be moved to such a warehouse as long as Hackstons also holds an account with that warehouse.
If you are unable to open an account with a warehouse and you would like to own a cask, we offer a second option which is ultimate beneficial ownership. Please see below for details.
As with all investments, values can go up or down. It is also worth noting that Scotch whisky is an unregulated industry, despite a number of strict controls on supply and demand with careful protections for investors and consumers alike.
Please note, there are risks to consider when investing in cask whisky, you can find more information around other risks relating to whisky cask investment, as well as our business terms, here.
Yes, if you enter the market on your own.
No, if you work alongside a tangible assets broker.
It is worth noting that there is an exception for the WOWGR certification for individual buyers, but there is uncertainty surrounding the limitations as to the number of casks that can be owned in order to comply (HMRC has not provided clear guidance on the exception). But, more importantly, nearly every warehouse in Scotland will no longer open accounts for individuals. In addition, due to the expansion of the industry, most warehouses are only looking to establish new accounts for buyers who own a sizeable number of casks.
The majority of warehouses don’t accommodate individuals who might only own a few casks, instead they often want to open corporate accounts with hundreds or thousands of casks.
However, there is an alternative for private investors looking to gain entry to the whisky cask investment market, such as working with a luxury assets brokerage such as Hackstons.
Ultimate beneficial ownership is very similar to holding something in trust. The Trustee, in our case would be Hackstons and we store and manage the casks on behalf of the ultimate beneficial owner. We have a fiduciary responsibility to ensure your casks are kept safe whilst in our Trust.
So this includes but is not limited to, the storage and insurance of your cask. So we keep your casks in a company client account and then invoice you separately for storage and insurance.
The certificate of ownership gives the end user (customer) what is known as the beneficial rights to the title of the cask.
Simply by holding the above documentation such as a certificate of ownership, you become the Ultimate Beneficiary Owner (UBO), which means that while the warehouse's records will state the name of the brokerage (Hackstons), due to you holding both the purchase invoice and the certificate of ownership your claim holds absolute legal precedence.
As this is a model that could be susceptible to unscrupulous activity, we have instructed an independent auditor to audit all stock and then contact customers directly to confirm their findings. This eliminates the question, 'Does my stock exist?', whilst simultaneously eliminating the ability for the same cask(s) to be sold on to multiple customers.
We believe we have pioneered this independent auditing process and for those that are unable to open an account with a warehouse, the hope is that within the next 2 years this can become industry standard as another measure for a customers peace of mind when purchasing a cask.
If you hold an account with a warehouse then it doesn’t impact you since you directly hold an account with the casks.
Under the Ultimate Beneficiary Owner Model if Hackstons were to cease operating then your casks would be protected, since they do not appear on our balance sheet. Instead the end user (customer) who holds the rights to the cask, would be contacted by the UK insolvency practitioner which has been appointed on the companies behalf, and by providing proof of ownership (Invoice, Proof of payment, Cert of Ownership) the practitioner would liaise with the relevant warehouses where your stock is stored in order to ensure the end user maintains their ownership.
But what if the warehouse goes into liquidation?
We own all of the casks that we sell, and ensure all stock is situated within a HMRC approved warehouse. This ensures all liquid is genuine and registered accordingly. All whisky in casks have a unique cask ID which is generated when originally filled at the distillery where it was produced. This information is stored on a centralised system which all warehouses have in place which links directly to HMRC, and means that detailed records are kept of your cask, and they verify that it is owned by you. This means that should there be any liquidation issues for any warehouses, your cask and investment will be safe.
10 years is recommended, however it is a 5-year minimum hold period when purchasing casks with Hackstons. The length of time you should hold your cask beyond this initial 5 years will depend on the brand of whisky and the age of the cask, alongside your own financial goals.
In the UK, you do not have to pay Capital Gains Tax on a cask of scotch, unlike bottled scotch whisky. However it is worth noting that when exiting, if you decide to bottle your cask, the process will be subject to duty and VAT. Due to the casks being held under bond you also do not need to worry about applying for a wholesale license, Hackstons will handle these details for you.
Gains achieved with Scotch whisky casks are subject to local tax laws.
95% of our business is Scotch, however, sometimes we do procure casks from other countries.
No need to worry.
Hackstons has a vast network of whisky distilleries, luxury auction houses and private scotch cask investors who are all interested in procuring Scottish whisky. We will present your options and leave the final decision to you.
If you are interested in exploring an exit strategy with us, we would be more than happy to help. Feel free to contact us.