Fulfilment house due diligence scheme: who must apply and what you’ll need

If you’re a fulfilment provider – whether you’re just starting out or you’ve been in the business for a while – it’s important to be aware of the government Fulfilment House Due Diligence Scheme. This scheme applies to all registered fulfilment providers operating in the UK, and there are a few things you’ll need to do in order to comply with it. In this blog post, we’ll outline who must apply for the scheme and what you’ll need to provide as part of your application. Keep reading for more information!

What is a fulfilment house?

A fulfilment house is a company that specialises in performing certain logistical operations for businesses. These specialised tasks may include handling physical shipments, managing inventory, or assisting with order fulfilment. Fulfilment houses can be particularly useful for companies that operate online and handle orders or shipments on a large scale. By outsourcing these tasks to a registered third-party provider, businesses can focus on core competencies while still providing top-quality customer service. 

Additionally, fulfilment houses are often able to offer their services at a lower cost than most businesses could achieve on their own. Thus, they can help companies to streamline their processes and increase productivity without sacrificing quality or increasing costs.

The due diligence scheme for fulfilment houses

The Fulfilment House Due Diligence Scheme is a vital tool for combating tax evasion and preventing abuse of tax rules. Designed to promote accountability amongst fulfilment houses, the scheme requires participating businesses to take on increased due diligence responsibilities; specifically tax and duty obligations, when it comes to their clients and the transactions they conduct.

This evaluation typically involves reviewing important documents, such as licences and insurance policies, as well as conducting an on-site assessment of the facility to assess safety and security standards. Depending on the level of due diligence required, this process may also include interviews with both current and former employees, as well as third-party verification from experts in similar industries. 

Overall, the goal of a due diligence scheme for fulfilment houses is to provide assurance that the company can consistently provide high-quality fulfilment services that meet industry and legal requirements. It  ensures that everyone is operating under the same set of rules and is essential for keeping the system fair and equitable for all.

Who must apply for the scheme?

Fulfilment houses must apply if they are owned by someone located outside of the UK or wish to store and trade on behalf of sellers there. Additionally, if you release goods into free circulation after storing them under a customs regime, you will also need to apply through a customs registration. There are, however, certain types of businesses that do not need to apply for this registration. This applies to businesses that own their stored goods and those in the business of transporting goods temporarily as part of their services. 

Regardless of whether you need to register or not, it is important to be aware of all the relevant requirements and regulations when dealing with stored goods in order to ensure compliance with customs laws and restrictions.

When to apply – don’t miss the deadline!

When it comes to applying for the fulfilment house due diligence scheme, timing is critical. If your business is covered by this scheme, you must complete and submit your application as soon as possible and before you start trading. Non compliance will result in restrictions on your ability to trade as a fulfilment business, as well as the risk of being charged penalties (£10,000) and even criminal conviction. Furthermore, if you are required to apply but your application is late and you do not notify HMRC with a legitimate reason, they may charge you a penalty of up to £500, which could increase by up to £500 each month if your application remains incomplete. 

To avoid these costly consequences, it is essential to seek guidance from a qualified accountant or tax professional and apply for the fulfilment house due diligence scheme well in advance of the deadline. With careful planning and expert guidance, you can successfully navigate this process and ensure that your fulfilment business is compliant.

What you’ll need to complete your application 

When applying for a fulfilment house due diligence scheme, there are several key items that you will need to have on hand. To start, you will need a Government Gateway user ID and password, which will be created when you make your application using your contact details. 

Additionally, to check your business details and ensure that they are accurate, you will need to supply your Unique Taxpayer Reference (UTR), which can be obtained from HMRC based on your company or business type. If you are a sole trader or operating as an ordinary business partnership, you will need to provide your individual Self Assessment UTR on top of these other items. With all of these important pieces of information in hand, you will be ready to complete the fulfilment house due diligence scheme application process with confidence.

Conclusion

As a business, it is important to stay up-to-date on the latest changes and schemes in order to ensure you are compliant. The Fulfilment House Due Diligence Scheme is one such scheme that all fulfilment houses must be aware of. Make sure you apply and have all the necessary documentation in place by the deadline if you want to continue trading as a fulfilment house. For more information or help with compliance, check out the government resources or get in touch with our team today and we will point you in the right direction.