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The Fulfilment House Due Diligence Scheme - New HMRC legislation

Warehouse pick and pack 

Do you hold stock for sellers established outside of the UK, or are you looking to do so in the future?

Then you will need to be aware of new regulations being implemented in a bid to retrieve unpaid duties.

The Fulfilment House Due Diligence Scheme has been designed to collect an estimated £1.5bn of lost revenue in taxes and duties, which are currently not being retrieved due to fulfilment centres being utilised by overseas retailers who are failing to declare goods properly, orare providing anunder-declaration of the value of the goods, with no VAT being paid following the online sale.

Anyone who holds goods that are imported from outside of the EU, which are owned, or stored on behalf of someone established outside of the union, and are to be sold in the UK will need to register for the Fulfilment House Due Diligence Scheme.

It’s not just large scale warehouse facilities which will be affected by the new scheme. The definition of what constitutes as a ‘fulfilment business’ under The Fulfilment House Due Diligence Scheme means that this will be a far reaching regulation, going so far as also incorporating individuals who may be channelling products through their garage or home.

Whilst the scheme will not come into fruition until 1 April 2019, fulfilment operators are required to act now, as current traders will need to complete the application by 30 June 2018.

Any individuals or organisations looking to begin fulfilment operations between now and 30 June 2018 have until 30 September 2018 to apply, with all fulfilment operators required to register by 1 July 2018.

The new regulation is not to be taken lightly either. Operators face penalties of up to £500 for each month a registration is late, whilst failure to register may prevent the continuation of operations, could incur significant penalties and even a criminal conviction.

As part of the new regulation, fulfilment businesses will be required to hold in-depth customer records, including the names and contact details of overseas customers and their VAT registration numbers. (or VAT exemption number if applicable), a detailed record of the goods held and quantities, import entry numbers, and these details will need to be retained for a minimum of 6 years.

To apply online you will be required to complete the following application form

Further details on the Fulfilment House Due Diligence Scheme can be found at https://www.gov.uk/guidance/fulfilment-house-due-diligence-scheme