As of this month the Fulfilment House Due Diligence Scheme opens for registration to help combat the abuse of VAT rules by online traders based outside the European Union (EU).

Fulfilment houses that are part of this scheme will be required to perform proper due diligence on the goods they fulfil and their overseas online tax appeal serviceclients.

If you run a business in the UK, such as a warehouse, that stores goods imported from outside the EU that are owned by, or on behalf of, someone established outside the EU, you will need to apply to register for the scheme.

The deadline for applications from existing fulfilment businesses is 30 June 2018, and businesses that start trading on or after today to 30 June 2018 will need to apply on or before 30 September 2018. There are penalties for late applications.

Businesses that meet the FHDDS criteria 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.

The FHDDS will help HMRC identify and combat non-compliant overseas suppliers more easily and make it more difficult for them to trade in the UK.

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

You may not think you’re a fulfilment business, but you should still register if you carry out these activities.

Businesses that must not register 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

Approved fulfilment businesses must complete due diligence checks on their overseas customers and maintain records about the goods they store from 1 April 2019.

VAT is complicated at the best of times, when it applies cross borders and even within the EU it’s always advisable to get professional advice. Why not speak to the Bedrock team today as VAT is a team specialism.

Further information can be found on the .Gov website.

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