Plan to crack down on online VAT fraud

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The government has launched a consultation on plans to deal with VAT fraud in online retail which it says is costing up to £1.5 billion a year.

The plans will affect fulfilment houses along with freight forwarders and express and logistics operators.

The problem relates to some non-EU traders. In its consultation paper, “Fulfilment House Due Diligence Scheme” HM Revenue and Customs said compliance checks carried out by Border Force and HMRC point to a growth in attempts to evade VAT and customs duty through abuse of reliefs to facilitate trade, and by misdeclaring and undervaluing goods imported from outside the EU by some non-EU overseas suppliers.

The government plans to introduce a due diligence scheme for UK-based fulfilment houses. The consultation paper said: “Many overseas suppliers that trade online make use of UK-based fulfilment house businesses to store, pack and/or deliver their online orders. A due diligence scheme will make it more difficult for non-compliant suppliers to trade in the UK and will enable HMRC to identify and tackle them more easily.

“Fulfilment houses will have an obligation to register and maintain accurate records. They will have provide evidence of the due diligence they have undertaken to ensure that their overseas client is a bona fide supplier.

“HMRC will publish a list of registered fulfilment houses so that freight and customs agents, fast parcel operators, express industry and other businesses will know whether the fulfilment house they are consigning goods to or from is registered or not. This consultation seeks views on how to deter or prevent deliveries of goods to an unregistered fulfilment house,” it said.

The aim is to bring the scheme into force in 2018.

The British International Freight Association says it is encouraging its members to complete the consultation.

Click here for details of the consultation:

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