Leading logistics services specialist, Walker Logistics, has warned that the government’s plan to introduce a ‘register for fulfilment houses’ who store and distribute goods on behalf of online retailers could have wide-ranging implications for the third party logistics (3PL) sector.
The ‘register’ was announced by chancellor George Osborne in his Spring Budget speech and is one of a range of measures that the government plans to take to crack down on non-EU online traders that do not pay the correct VAT and duty to HMRC on goods that they store in UK warehouses before selling them to UK consumers via web-based channels.
The problem is said to be costing the treasury an estimated £1.5bn in lost VAT revenue each year.
“With online shopping now accounting for some 20 per cent of all non-food retail spending in the UK, these overseas traders are unfairly undercutting all businesses trading in the UK, abusing the trust of UK consumers and depriving the government of significant revenue,” says David Gauke, financial secretary to the treasury.
The government defines a ‘fulfillment house’, as: ‘a business that provides services of storage, breaking bulk, unpacking, re-packing and making (or arranging) subsequent delivery to its clients’ customers of goods imported from outside the EU which have been cleared for customs purposes.’
The ‘register’ – which is set to come in to effect in 2018 – will set down ‘fit and proper’ standards that a ‘fulfilment house’ will need to meet in order to operate.
For example, 3PL operators will have to maintain accurate records and be able to provide evidence of the due diligence they have undertaken to ensure that their overseas clients are VAT registered in the UK, or legitimately non-registered.
It is hoped that the introduction of the ‘fulfilment house register’ will make it more difficult for non-compliant online retailers to trade in the UK and, at the same time, enable HMRC to identify and tackle them more easily.
Bob Montague, managing director of Walker Logistics, commented; “Of course the government must stamp out fraudulent activity that is illegally depriving HMRC of tax revenue.
“However, the proposed ‘fulfilment house register’ throws up a number of issues that are likely to concern the logistics sector. For instance, will it add further unnecessary and unhelpful levels of beaurocracy that will hinder the day-to-day running of businesses operating in a sector already overly burdened by red tape?
“It would also appear that the logistics industry is being recruited to ‘police’ the online trading market – which seems wholly unreasonable.”
Established in 1999, Walker Logistics offers a comprehensive range of bespoke logistics services to a broad range of clients from a modern facility close to Junction 14 of the M4.