“This is a crackdown on certain non-EU businesses which are avoiding VAT regulations and flooding the UK market with cheap, often fraudulent, online goods. This avoidance of the rules enables unscrupulous companies to undercut those playing by the rules, and represents a significant threat to UK domestic businesses.
“Fulfilment houses, warehouses and distribution companies dealing with goods imported from a non-EU business for sale in the UK must register for the scheme and also ensure their clients are VAT registered.
“Existing fulfilment businesses need to apply by 30 June 2018, and any company starting to trade after 1 April 2018 has until 30 September 2018 to register. The penalties for non-compliance can quickly add up as there’s a £500 charge for every non-compliant month. Furthermore, from April 2019, non-compliance means a £10,000 penalty, criminal conviction and the right to trade in the UK will be revoked.
“Big players have their due diligence well underway but many businesses are falling behind. To demonstrate compliance businesses need to put the right checks in place and collate information and VAT numbers on all the customers they trade with. HMRC means business with enforcement of these rules and it’s important to be ready.
“The new scheme may be another administrative burden, especially so for smaller companies, but the government has got to take decisive action to clampdown on non-compliant goods. There are fears that leaving the EU will exacerbate this problem, as neighbouring regions may be tempted to use loopholes currently exploited by non-EU traders, so now is the right time to act.”