Hackstons | Frequently Asked Questions

Frequently Asked Questions

Are scotch casks FCA REgulated?

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.

What is a Delivery Order? How do I know where my cask is?

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.

Are there any limitations on storage for private investors?

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 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 lucrative whisky cask investment market, such as working with a luxury assets brokerage such as Hackstons.

What is Hackstons’ Ultimate Beneficial Owner Model?

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.

Can I purchase through my business?

Yes. Business transactions are accepted. We will require AML documentation from the company director and any shareholders.

What happens if Hackstons went into liquidation?

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.

How long should I hold onto my cask for?

It depends.

5 years is recommended. However, the length of time can depend on the brand of whisky alongside your own financial goals e.g. how much money you wish to make back?

To aid in this, Hackstons’ expert Portfolio Managers will reach out to you when our research dictates the greatest returns while aligning with the goals you set out with. Our consultative approach means that you do not need to worry about watching the scotch whisky cask markets, we will do it for you!

Are scotch casks a tax free asset?

In the UK, you do not have to pay capital gains tax on a cask of scotch, unlike bottled scotch whisky. 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.

Do I need to pay tax on a scotch whisky cask investment if I am a US citizen?

Gains achieved with Scotch whisky casks are subject to local tax laws.

Does Hackstons only sell scotch whisky?

95% of our business is Scotch, however, sometimes we do procure casks from other countries.

Do I need to find a buyer?

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.

I already own a cask and am looking to sell, can Hackstons help?

Yes.

If you are interested in exploring an exit strategy with us, we would be more than happy to help. Feel free to contact us.

How secure are returns on a cask of whisky?

Far less risky than stocks, equities and cryptocurrencies as there are far less points of failure. However, at Hackstons we believe in transparency so below is a list of potential risks of scotch whisky investing:

Slow down of global demand for whisky
Oversupply of whisky
Damage to the storage, covered by fire and theft insurance
Changes to legislation involving the sale of whisky
Certain countries implementing a prohibition of alcohol
Outbreak of global conflict or a natural disaster catastrophic enough to shut down global supply chains

These risks are all either highly unlikely or can be managed by working with a brokerage such as Hackstons. Scotch whisky is a heavily regulated industry with strict controls on supply and demand with careful protections for investors and consumers alike.
Feel free to contact us and speak to our experts if you would like to learn more.

Frequently Asked Questions

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