Fulfilment houses are third party services that take care of fulfilling client orders on the business owner’s behalf. Fulfilment houses take charge of receiving the products from the supplier, housing the inventory, receiving the orders from the business owner’s clients, and packaging and shipping said orders to the business owner’s clients. HMRC estimates that overseas traders selling goods online to UK customers are costing the exchequer £1-1.5 billion of VAT a year. HMRC intend to combat this abuse by introducing a new Fulfilment House Due Diligence Scheme which will open in 2018. Currently many goods are misdeclared and undervalued as they are imported from outside the EU. This is followed by the onward sale of the goods to customers in the UK without the correct amount of VAT being paid.
The scheme will require all existing Fulfilment House businesses to register with HMRC from 1st April 2018 – 30th June 2018. HMRC will have from 1st July 2018-31st March 2019 to verify all applications. Any new businesses must register within 45 days in advance of the date they wish to begin trading. An online register of approved fulfilment houses will be available from 1st April 2019.
Fulfilment houses currently should hold:
As part of the scheme HMRC will require mandatory evidenced checks on the following:
If your fulfilment house is not approved the business will not be allowed to trade.
There will be both Criminal and Civil penalties as well as a range of other penalties that are still in consultation. Criminal penalties will apply to the person upon who the obligation to register applies. Additionally forfeiture of all goods from non-compliant or houses that are operating contrary to approval will take place. Owners of goods seized from non-compliant fulfilment houses will have to formally request via HMRC for restoration. However, any goods that are found to have underpaid tax or duty will be treated under the current powers.
HMRC will notify businesses in writing if they intend to revoke an approval giving reasons. This decision will be able to be appealed.
Yes. Altion Law can review existing business processes and assist with the application process. The scheme is very similar in design to another scheme called the AWRS and we have extensive experience in this area. We would also urge businesses that have been refused any previous registrations or have failed the ‘fit and proper’ test to contact us at the earliest point. Altion Law will also offer an dry run service in 2018 where we will work through the likely scheme questions with your business in advance of the HMRC interview to insure you are aware and correctly prepared. Altion Law can also assist with appealing any fines or penalties applied under the scheme but again businesses only have limited time to lodge an appeal. Call one of our team for a free consultation on 01908 414990
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Compliance Manager & Paralegal
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QC: Consultant Barrister
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