The HMRC Fulfilment House Due Diligence Scheme is open for registration. This scheme aims to ensure that fulfilment houses play their part in reducing abuse of VAT rules by online traders based outside the EU. You can apply to register on the gov.uk website.

As the centrepiece of a package of measures to combat the abuse of VAT rules by online traders based outside the European Union. Anyone that runs 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.

Once you’re approved:

  • You’ll be put on a register
  • You must keep certain records
  • You must carry out checks on your overseas customers and the goods you store

Businesses that meet the Fulfilment House Due Diligence Scheme 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. If you do register but your application is late, HMRC can charge you a penalty of up to £500. This could increase by up to £500 each month your application is late, up to a maximum of £3,000.

The deadline for applications from existing fulfilment businesses is 30 June 2018, and businesses that start trading on or after 1st April to 30 June 2018 will need to apply on or before 30 September 2018. Any businesses that start trading on or after 1st July 2018 need to apply before 1st October 2018 or before the date you start trading (whichever is later).

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

Businesses that only store or fulfil goods that they own, or only store or fulfil goods that are not imported from outside the EU, are not required to register. If you run a fulfilment business you’ll want to make very sure that your clients shipments are already legitimately imported into the UK (or EU) and the companies you trade with are registered locally.