Commencement of due diligence scheme for imports starts 1 April 2018

The UK Government campaign to crack down on tax evasion mean there is a new due diligence scheme for fulfilment house which handle goods imported from outside the European Union. Businesses which stores any goods imported from outside the EU, goods owned by or stored on behalf of someone established outside the EU will need to register for this scheme. If goods are stored temporarily as part of transport service do not need to register for this scheme.

There are different deadlines for applying for the scheme

If you started trading in this area before 1 April 2018 you need to apply by 30 June 2018

If you started trading in this area from 1 April 2018 to 30 June 2018 you need to apply by 30 September 2018

If you started trading in this area from 1 July 2018 you need to apply by 1 October 2018 or before the date you start trading (which is later).

Late applications can incur a penalty of £500 which can increase by £500 each month the application is late to a maximum of £3,000.

If your business is covered by this scheme and you are not registered by 1 April 2019 HMRC can force your business not to trade as a fulfilment business and also issue a penalty of £10,000 and a criminal conviction.

From 1 April 2019, registered businesses will be required to keep a record of:

  • overseas customers’ names and contact details;
  • overseas customers’ VAT registration numbers;
  • the type and quantities of goods stored in the warehouse;
  • import entry numbers;
  • the delivery addresses; and
  • notices that the business will need to give its overseas customers, which explain their tax and duty obligations in the UK.

Records must be kept for six years – a penalty of £500 may be imposed for failure to comply with this requirement.

If you would like to discuss this further with a member of the VAT team, please contact Jonathan Main on 01772 821021.