A delivery order is the industry standard way of transferring ownership of a cask between two people. It is a document signed by the seller and the buyer and acknowledged by the warehouse where the cask is stored.
The legal requirement for a delivery order was revoked in 2006, however it still remains the industry standard way of transferring ownership and provides certainty for you as a purchaser, and is therefore what we suggest requesting as a private individual purchasing casks.
Why do we still use delivery orders if they aren’t legally required?
The law prescribing delivery orders in section 32 of ALDA was repealed by the Finance Act 2006. Despite this, delivery orders are still used as standard by the industry because they provide a solution to the industry over how to meet the requirements of other existing legislation that governs how warehouses are run; WOWGR along with Excise Notice 196 and 197.
WOWGR or The Warehousekeepers and Owners of Warehoused Goods Regulations 1999 Part V – (3) states that “Relevant goods shall not be sold whilst they are being kept in an excise warehouse unless the seller, or if the seller has a duty representative that representative, gives notice of the sale to the authorized warehousekeeper.”
Excise Notice 196 Section 5.8 states “The owner or duty representative of excise goods stored in an excise warehouse must inform the excise warehousekeeper in advance when any duty-suspended goods are sold in warehouse.”
Excise Notice 197 section 8.2 and 8.3 respectively state that “the seller must inform the warehousekeeper that the goods are to be sold and give details of the purchaser’s registration” and that “the buyer must inform the warehousekeeper that the goods are to be purchased and give details of your WOWGR registration to the warehousekeeper”
A delivery order notifies the warehouse of the sale in a formal manner, satisfying the warehouse’s requirements under the three legislations mentioned above.
As a delivery order isn’t legally required a warehouse can decide how they will receive notification of sale. If you are not getting a delivery order you still need confirmation from the warehouse that the other transfer meets their requirements.
Why do I need a delivery order?
If you are buying a cask then a delivery order acknowledged by the warehouse gives you confidence that your cask exists and that you have full autonomy over it.
If you do not have a delivery order and you have not received acknowledgement from the warehouse that the cask is yours then there is a good chance that you only own that cask via the company you purchased it from. If you have only received a Certificate of Ownership, Beneficial Title or something similar then at the warehouse level the company you purchased from still own the cask. That company has likely simply internally assigned to you some level of right to that cask now or in the future.
Without a delivery order you therefore need to do a lot of additional work to ensure that your asset is safe now and in the future.
Furthermore, if the company selling the cask to you has not made the ownership structure clear then they have misled you.
When is no delivery order okay?
If you have received confirmation from the warehouse where the cask is stored that the cask is in your name then that is an acceptable proof of transfer.
If you have purchased a cask directly from a distillery who store their own casks then you don’t need a delivery order.
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Do I need a WOWGR to own a cask?
You do not need to be registered under WOWGR to own a cask of whisky as a private individual. So you do not need “a WOWGR” to get a delivery order.
WOWGR registration is for revenue traders, which is defined in Excise Notice 206: revenue traders’ records, as “a trader involved in any way with goods or services liable to Excise Duty.” Emphasis added.
As long as you are not trading in casks then you are not a revenue trader and therefore you are exempt from registering under WOWGR as per section 5.1 of Excise Notice 196, “All owners of duty-suspended excise goods must get approval and registration, unless: the owner of the excise goods is not a revenue trader.” Emphasis added.
This also applies if you are a private individual based outside of the UK.
If you are an overseas based business/revenue trader then you need a duty representative to own casks stored in the UK.
If you are a UK based business, or a private individual who owns enough casks to be considered a revenue trader then you need to be registered under WOWGR and should take formal legal advice.
How do I get a delivery order?
In order to fully own a cask at the warehouse level you need an account at the warehouse where the cask is stored.
Once the warehouse has opened you an account then you can request the seller to issue a delivery order for you to sign and return to the warehouse. The warehouse will acknowledge the receipt and confirm the transfer.
What if the warehouse won’t open an account for me?
Unfortunately malpractice means that a number of warehouses will not open private accounts at the moment. A reputable cask broker should be able to suggest a suitable warehouse, so we suggest contacting your broker as the first step.
If you want further reading on the technicalities and risks of not owning your cask at the warehouse level you may find the following articles interesting: