Fulfilment houses are being drawn into government endeavours to deal with the loss of revenue by the activities of traders based outside the EU. From 1 April 2019, approved fulfilment businesses will be required to complete due diligence checks on their overseas customers and maintain records about the goods they store.
HMRC have announced that if you run 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 Fulfilment House Due Diligence Scheme (FHDDS).
The deadline for applications from existing fulfilment businesses is 30 June 2018, and businesses that start trading on or after today to 30 June 2018 will need to apply on or before 30 September 2018. There are penalties for late applications.
Businesses that meet the FHDDS criteria will not be allowed to trade as a fulfilment business from 1 April 2019 unless they are approved by HMRC and they will risk a £10,000 penalty and a criminal conviction unless they register.
The FHDDS will help HMRC identify and combat non-compliant overseas suppliers more easily and make it more difficult for them to trade in the UK.
This will make the market fairer for the many legitimate and compliant businesses trading in the UK that pay the VAT and customs duty that they owe.
The scheme was announced by the government at Budget 2016 as part of a package of measures that will disrupt and deter abuse by some overseas businesses selling goods to UK customers through online marketplaces – HMRC estimated that this was costing the Exchequer £1 billion to £1.5 billion of unpaid VAT a year.
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. Transport businesses that need to store goods temporarily as part of their service, such as during an overnight break, are also not required to register.