HAMMAD BAIG

CUSTOMS FULFILMENT HOUSE

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If you store goods in the UK for sellers established outside the EU who sell on online marketplaces such as Amazon and eBay, you may need to apply for the Fulfilment House Due Diligence Scheme.

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Once you’re approved:

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• 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

 

You’ll be charged penalties if you do not apply and register at the right time.

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Businesses that must be registered

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You need to be registered if your business stores any goods where all of the following apply:

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• 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 have not been sold in the UK before

 

Businesses that are registered with HMRC for other schemes that require due diligence on customers must also register for this scheme if they meet these criteria.

 

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

 

Do not apply if:

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• 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

 

The goods are stored under a customs regime and are not in free circulation.

 

You’ll need to apply when the goods are released into free circulation if you continue to store those goods and they are still offered for sale.

 

When to apply

 

When you start trading before 1 April 2018 you must apply on or before 30 June 2018

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When you start trading before from 1 April 2018 to 30 June 2018 you must apply on or before 30 September 2018.

 

When you start trading from July 2018 you must apply before 1 October 2018 or before the date you start trading (whichever is later). 

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If 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.

 

If your business is covered by this scheme you must be registered before 1 April 2019.

 

If you are not, you:

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• will not be allowed to trade as a fulfilment business

• risk a £10,000 penalty and a criminal conviction

 

How to apply

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Apply for the Fulfilment House Due Diligence Scheme.

Under Regulation 3(1) and 4(1)(a) of The Fulfilment Businesses Regulations 2018, the next 2 bullets have force of law:

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• you must submit your application using the online service for the Fulfilment House Due Diligence Scheme

• you must enter all information required by the application as specified by HMRC

 

If you’re not a sole trader, limited company or ordinary business partnership, you’ll need to contact HMRC to apply.

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What you’ll need

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You must have a valid Government Gateway User ID and password. You can create an account if do not already have one. You’ll need an:

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• organisation account if you’re a limited company or ordinary business partnership

• individual account if you’re a sole trader

 

To verify your business details HMRC will try to match them to an HMRC record that holds your Unique Taxpayer Reference (UTR).

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This will be your:

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• company UTR as a limited company

• Self Assessment UTR for an ordinary business partnership

• individual Self Assessment UTR as a sole trader

 

You’ll also need to know:

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• the names of all business directors, company secretaries or partners, and either their National Insurance number, or if they are a non-UK resident, their passport number or national ID number

• approximately how many customers, that your business currently stores goods for, are established outside the EU

• the addresses of any storage premises in the UK used to store third-party goods imported from outside the EU, and whether these premises are operated by third parties

• how long you’ve operated at your main business address

• any previous addresses the business has operated from in the last 3 years

• your business’s company registration number and date of incorporation (if you’re applying as a limited company)

• the business’s UK VAT registration number (if it has one)

• the names, VAT registration numbers or company registration numbers of any company officers, if they’re a company rather than an individual

• any EORI number that the business currently uses

 

Amend or withdraw your application

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Under Regulation 3(1), 5(1) and 4(1)(b) of The Fulfilment Businesses Regulations 2018, the next 2 bullet points have force of law:

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• you can amend your application at any time before HMRC has given their decision

• you must submit any amendments to your application using the online service for the Fulfilment House Due Diligence Scheme

 

Tell HMRC about a change to your application using the online service.

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Amended applications are treated as being received by HMRC on the date they’re resubmitted.

 

Withdraw your application using the online service.

 

What happens next

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HMRC will check your:

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• application against their records

• partners, directors and other key people involved in your business to make sure:

  • they’ve not been involved in or connected to significant revenue non-compliance or fraud within the last 6 years

  • any relevant criminal convictions have been spent

  • they’ve complied with HMRC requirements

 

Check the progress of your application.

 

HMRC’s decision

 

Under Regulation 3(2) and Regulations 6(1), 6(2), 6(3), 6(4) and 6(6) of The Fulfilment Businesses Regulations 2018, this section has force of law.

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HMRC may ask for more information, or for permission to inspect your premises, on or by a specified date, to help process your application. If you do not provide this information or allow the premises to be inspected by the specified date, your application will be treated as having been withdrawn.

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HMRC will make any requests and tell you if your application has been approved or rejected using the secure messaging facility in your business tax account.

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If your application has been approved, you’ll receive confirmation from HMRC which will include:

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• the unique reference number allocated to the approved person

• the date from which the approval begins

• any conditions or restrictions imposed on the approved person

• a reference to the obligations imposed on approved persons under the law

 

If your application has been rejected, HMRC will tell you why.

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When you’re registered

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From 1 April 2019, you must keep a record of:

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• your overseas customers’ names and contact details

• your overseas customers’ VAT registration numbers or their VAT exemption reference numbers

• the type and quantities of goods stored in your warehouse

• import entry numbers

• the country where the goods are delivered

• notices that you’ll need to give your overseas customers, which explain their tax and duty obligations in the UK

 

You must keep these records for 6 years. You can be charged a penalty of up to £500 if you do not keep these records.

 

What you must check

 

You must verify all your overseas customers’ VAT registration numbers.

 

If your overseas customer is not required to be VAT registered, you should verify their HMRC VAT exemption reference number.

 

HMRC will provide further details on how to verify these before 1 April 2019.

 

If you suspect your overseas customer has not met any of its VAT or customs duty obligations, you:

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• should work with them to help make sure they do in the future

• must notify HMRC

• must stop working with them if they do not start to comply with their obligations

 

There are penalties of between £500 and £3,000 if you do not.

 

Changes once you’re registered

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Under Regulation 3(2) and Regulations 12(1), 12(2) and 12(3) of The Fulfilment Businesses Regulations 2018, the next 2 bullet points have force of law:

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• once you’ve been approved by HMRC any changes to your registered details must be submitted using the online service for the Fulfilment House Due Diligence Scheme

• HMRC has specified that the registered details are the application information required in the online service for the Fulfilment House Due Diligence Scheme

 

You must tell HMRC about any changes to your registered details by 30 April 2019 or within 30 days of the change, whichever is later.

 

Change your registered details using the online service.

When you stop trading as a fulfilment business

 

If you stop trading as a fulfilment business, you must tell HMRC within 30 days from the date you stop trading.

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Under Regulations 3(2) and 13 of The Fulfilment Businesses Regulations 2018:

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• you must tell HMRC that you’ve stopped trading using the online service for the Fulfilment House Due Diligence Scheme

• HMRC has specified the information required in the online service for the Fulfilment House Due Diligence Scheme

 

You’ll no longer be approved to trade as a fulfilment business from the date you tell HMRC.

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Cancel your registration using the online service.

 

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