Fulfilment House Due Diligence Scheme Approval
1st April 2019
In April 2019, HMRC are bringing in a new quality standard for logistics companies who provide fulfilment services. The Fulfilment House Due Diligence Scheme ensures that fulfilment houses play their part in reducing the abuse of VAT rules by online traders based outside the EU.
Part of a package of measures to combat the abuse of VAT
Spatial Global has now been approved under the HMRC Fulfilment House Due Diligence Scheme. It aims to disrupt and deter abuse by some overseas businesses selling goods to UK customers through the online marketplace - HMRC estimated that this was costing the Exchequer £1 billion to £1.5 billion of unpaid VAT a year.
What being a customs fulfilment house means…
Approved fulfilment businesses must complete due diligence checks on their overseas customers and maintain records about the goods they store from 1 April 2019.
Spatial Global applied for this Kitemark in order to demonstrate continued good practices and compliance in this area in November 2018. It required two HMRC inspections of our systems, procedures and documentary audits for stock control within our warehouse were reviewed to ensure compliance. In January 2019 it was confirmed that we were approved as a customs fulfilment house.
Rachel Morley, Freight Manager, Spatial Global
Which businesses it impacts…
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.
Which businesses it doesn’t effect…
Businesses that only store goods which they own themselves are not required to register. The same applies for businesses that only store goods that are not imported from outside the EU.
How it works…
Non compliance risks £10,000 penalty and a criminal conviction…
The aim of the Fulfilment House Due Diligence scheme is to combat non-compliant businesses which do not pay VAT or Customs Duty when they are due. Therefore, where a registration under the scheme is required, the fulfilment house will be required from 1 April 2019 (i.e. a 12 month lead time) to keep records on their customers outside the EU for whom they store goods and do due diligence checks.
Even if businesses meet the Fulfilment House Due Diligence Scheme criteria they 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.