HMRC Fulfilment House Due Diligence Scheme registration open

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The HMRC Fulfilment House Due Diligence Scheme has now opened for registration. This scheme aims to ensure that fulfilment houses play their part in reducing abuse of VAT rules by online traders based outside the EU. You can apply to register on the gov.uk website.

As the centrepiece of a package of measures to combat the abuse of VAT rules by online traders based outside the European Union. Anyone that runs a business in the UK, such as a warehouse, that stores goods imported from outside the EU that are owned by, or on behalf of, someone established outside the EU, you will need to apply to register for the scheme.

Once you’re approved:

  • You’ll be put on a register
  • You must keep certain records
  • You must carry out checks on your overseas customers and the goods you store

Businesses that meet the Fulfilment House Due Diligence Scheme criteria will not be allowed to trade as a fulfilment business from 1 April 2019 unless they are approved by HMRC, and risk a £10,000 penalty and a criminal conviction if they do so. If you do register but your application is late, HMRC can charge you a penalty of up to £500. This could increase by up to £500 each month your application is late, up to a maximum of £3,000.

The deadline for applications from existing fulfilment businesses is 30 June 2018, and businesses that start trading on or after 1st April to 30 June 2018 will need to apply on or before 30 September 2018. Any businesses that start trading on or after 1st July 2018 need to apply before 1st October 2018 or before the date you start trading (whichever is later).

Approved fulfilment businesses must complete due diligence checks on their overseas customers and maintain records about the goods they store from 1 April 2019.

Businesses that only store or fulfil goods that they own, or only store or fulfil goods that are not imported from outside the EU, are not required to register. If you run a fulfilment business you’ll want to make very sure that your clients shipments are already legitimately imported into the UK (or EU) and the companies you trade with are registered locally.

4 Responses

  1. I think this might be the reason behind the Amazon omnishambles mass rejection of of sole traders valid UK VAT numbers. They must have tried to get their house in order and root out any dodgy VAT numbers, used bots (of course, because they work soooo well) used VIES which lays out details slightly differently to the actual VAT cert and so come to the incorrect conclusion about many sole traders.

    I’m surprised Tamebay hasn’t done an article on it. There are some interesting threads on Amazon seller forums.

  2. It has also led to HMRC ramping up the amount of unannounced inspections they’ve been doing, citing it as an excuse to “educate” this in the business. Although their idea of education includes major disruption!

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