Put simply a fulfilment house ensures that goods are stored, picked, packed and fully integrated into a business’s website and shopping
channels. HMRC clearly has concerns about the level of fraud associated with such operations.
The Fulfilment House Due Diligence Scheme (FHDDS) regime was to be introduced in primary legislation this summer, but was delayed due to the snap general election. HMRC has now confirmed that the measures will be included in an early-autumn Finance Bill, along with secondary legislation.
The plan remains to introduce an approved fulfilment house register from April 2018, and make it compulsory from April 2019. All qualifying businesses will have to perform certain checks on their customers in an attempt to detect and report sales without VAT, or under declared customs values on goods.
The measures mean that the fulfilment house must retain:
- The details and address of any non-EU owner of the goods, and that this is satisfactory
- The import entry number
- The valid VAT registration certificate of the owner of the goods
- Onward supply delivery documents
- Clear records of all goods, including descriptions, and their ownership
- Proof of notification to the non-EU seller of their VAT obligations
All of this is likely to add to the administrative burden already faced by business and is indicative of HMRC introducing additional compliance for trades where they have concerns about potential fraud. We suspect there will be further tightening up of processes as they are reviewed as we head towards full Brexit in 2019.
We have an experienced VAT team who can help you get on top of these issues with a VAT review, give us a call to discuss how we might be able to assist or take a look at our VAT related pages here.
