Spatial Global working on pilot of HMRC’s Fulfilment House Due Diligence Scheme

 

Additional administrative burden and new obligations on goods imported from outside the EU

HMRC’s Fulfilment House Due Diligence Scheme will add administrative burden and new obligations on any company or individual storing goods which are imported from outside the EU and being offered for sale online. This is because HMRC believes £1.5bn of VAT and Customs duty is not being paid in relation to large amounts of e-commerce taking place under the radar, with fulfilment houses being used by unscrupulous retailers based outside the EU. The Fulfilment House Due Diligence Scheme is designed to clamp down on what has to date been a largely unregulated sector.

 

Businesses have an obligation to register under the Fulfilment House Due Diligence scheme

Introduced on 1 April 2018, businesses now have an obligation to register under the Fulfilment House Due Diligence scheme if they store goods in the UK which (a) have been imported from outside the EU, (b) are owned by (or on behalf of) someone who is established outside the EU and (c) the goods are being offered for sale and have not been sold in the UK before.

 

Failure to Register on the scheme could lead to a £3,000 fine

HMRC’s Fulfilment House Due Diligence scheme started in April and aims to tackle VAT and customs duty fraud by overseas importers. You must be approved by HMRC and your application needed to be submitted online to HMRC by 30 June 2018. The penalties for late applications start at £500 and escalate to a maximum of £3,000. Businesses risk a £10,000 penalty and a criminal conviction if they trade without approval on or after 1 April 2019.

 

As a fulfilment house you could be responsible for goods that don’t meet safety standards

Any fulfilment house will be required to keep records of customer details, VAT information, descriptions of the types and quantities of goods being stored, import entry numbers and other information. Companies can no longer take an ‘out of sight, out of mind’ approach; they will have to carry out checks on the contents of the boxes they handle, in order to keep an accurate record of ‘type and quantity’. This, in turn, may have implications relating to Trading Standards, because companies could then be held responsible for any goods dispatched that don’t meet safety standards.

 

What happens if a customer fails to meet the required standards?

If overseas customers are suspected of failing to meet VAT and/or duty obligations, businesses registered under the Fulfilment House Due Diligence scheme are required (a) to work with their customer to ensure future compliance, (b) to notify HMRC and (c) to stop working with their customer if they do not comply.

 

Spatial Global are registered and actively consulting with HMRC

So far, response to the registration has been limited, however HMRC are keen to receive responses from companies explaining why some of the measures they are suggesting won't work. Which is why Spatial Global is registered and actively consulting with HMRC on the practicalities of the proposal.

Representing businesses who do fall into the categories of requiring registration Spatial Global has registered registered its own business activities with HMRC. Alongside our Customs Bonded Warehouse, AEO status and HMRC deferment, the HMRC Fulfilment House Due Diligence Scheme gives Spatial Global a wide suite of demonstrable continued compliance and competencies with HMRC, making Spatial Global a safe place to do business!

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