Fulfilment House Due Diligence Scheme

Fulfilment Centre Due Diligence Scheme UK 

If you store goods in the UK for sellers established outside the EU, you may need to apply for the Fulfilment House Due Diligence Scheme.  The following information has been issued by HMRC and details the new rules that will affect you if you are a fulfilment centre. The Fulfilment House Due Diligence Scheme was set up to reduce the amount of online VAT fraud. 

Once you have applied and have been approved, the following will happen:

– You’ll be put on a register

– You must keep certain records

– Fulfilment businesses must carry out due diligence checks on your overseas customers and the goods you store from 1 April 2019

– You’ll be charged penalties if you don’t apply and register at the right time.

Businesses that must be registered

You need to be registered if your business stores any goods where all of the following apply:

– The goods were imported from a country outside the EU

– The goods are owned by, or stored on behalf of, someone established outside the EU

– The goods are being offered for sale and haven’t been sold in the UK before

Businesses that must not register

Don’t apply if:

– You own the stored goods

– Your main business is transporting goods and you need to store those goods temporarily (for example, overnight) as part of your transport services

How and when to register

The deadline for applications from existing fulfilment businesses was 30 June 2018.

Register here.

Before you’re approved

HM Revenue and Customs (HMRC) will check your:

– Application against their records

– Partners, directors and other key people involved in your business to make sure:

• They’ve not been involved in or connected to significant revenue non-compliance or fraud
• Any relevant criminal convictions have been spent
• They’ve complied with HMRC requirements

HMRC may ask for more information or visit your premises to help process your application.

They will then notify you if your application has been approved.

If your application is late

HMRC can charge you a penalty of £500 for a late application. This could increase by £500 each month your application is late, up to a maximum of £3,000.

If your business is covered by this scheme you must be registered by 1 April 2019. If you aren’t, you:

– Won’t be allowed to trade as a fulfilment business

– Risk a £10,000 penalty and a criminal conviction if you trade as a fulfilment business without approval after 1 April 2019

When you’re registered

From 1 April 2019, you must keep a record of:

– Your overseas customers’ names and contact details

– Your overseas customers’ VAT registration numbers

– The type and quantities of goods stored in your warehouse

– Import entry numbers

– The delivery addresses

– Notices that you’ll need to give your overseas customers, which explain their tax and duty obligations in the UK

You must keep these records for 6 years. You can be charged a penalty of £500 if you don’t keep these records.

What you must check

You must verify all your overseas customers’ VAT registration numbers.

If you suspect your overseas customer hasn’t met any of its VAT or customs duty obligations, you:

– Should work with them to help make sure they do in the future

– Must notify HMRC

– Must stop working with them if HMRC sends you a notice

There are penalties of between £500 and £3,000 if you don’t do these checks.

Read HMRC’s guidance on the Fulfilment House Due Diligence Scheme here.