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What Is FHDDS and Does Your Fulfilment Partner Need It?

FHDDS — the Fulfilment House Due Diligence Scheme — is an HMRC registration scheme for UK fulfilment businesses that store goods imported from outside the UK which are owned by sellers established outside the UK. If that describes your situation (you're a non-UK seller importing stock into a UK warehouse), the scheme applies to the warehouse you use, and it affects you directly: an unregistered fulfilment house handling in-scope goods is breaking the law, and HMRC can seize the goods it holds. Here's what the scheme actually requires, who it covers, and what to ask before you send stock to any UK 3PL.

Why the scheme exists

FHDDS was introduced by HMRC (it came into force in phases from 2018) as part of a crackdown on VAT evasion by overseas ecommerce sellers. The pattern HMRC wanted to stop was simple: a seller outside the UK imports goods into a UK warehouse, sells them online to UK customers, and never registers for or pays UK VAT. The goods sit in a British warehouse, but the seller is out of reach.

Rather than chase thousands of overseas sellers individually, HMRC put obligations on the warehouses. If you store imported goods for overseas sellers, you must register, carry out due diligence on those sellers, and notify HMRC of sellers who appear non-compliant.

Who has to register

A business must register for FHDDS if, broadly, all of the following apply (this is our plain-English summary — the legal tests are HMRC's, so check their current guidance for edge cases):

  • It stores goods in the UK,
  • the goods were imported from outside the UK,
  • the goods are owned by, or stored on behalf of, a person established outside the UK, and
  • the goods are being offered for sale (typically online) and haven't yet been supplied in the UK.

Note what this means in practice:

  • A 3PL storing goods only for UK-established sellers does not need to register for those goods.
  • A 3PL storing imported goods for overseas sellers — the classic China-to-UK Amazon seller model, or a US brand expanding into the UK — needs to be registered before it can lawfully hold that stock.
  • The scheme applies to the fulfilment business, not the seller. But the consequences land on both.

What a registered fulfilment house must do

Registration is not a rubber stamp. An FHDDS-registered business has ongoing obligations, including:

  • Verifying sellers: recording each overseas customer's name, contact details, and VAT registration number (or evidence of why one isn't required).
  • Keeping records: what goods are stored, for whom, and the import entry details, retained for HMRC inspection.
  • Giving notices: informing overseas customers of their UK VAT and duty obligations.
  • Reporting and refusing: if a registered fulfilment house knows or has reasonable grounds to suspect a seller isn't meeting its VAT obligations, it must notify HMRC and, ultimately, stop working with that seller.

In other words, a properly registered fulfilment house will ask you for paperwork. That's not bureaucratic awkwardness — it's the scheme working as designed.

What happens if a fulfilment house isn't registered

The penalties sit mostly on the warehouse — trading as an unregistered fulfilment house when required to register is a criminal offence, with fines and potential forfeiture of goods. But sellers are not insulated:

  • Your stock is at risk. HMRC can seize goods held by a non-compliant fulfilment house. Your inventory can be collateral damage in someone else's enforcement action.
  • Your supply chain stops. If HMRC shuts a warehouse down or restricts it, your orders stop shipping with little notice.
  • It signals wider sloppiness. A 3PL that hasn't dealt with a legal registration it plainly needs is unlikely to be rigorous about your inventory counts either.

Does your fulfilment partner need it? A quick test

| Your situation | Does FHDDS apply to the warehouse? | | --- | --- | | UK-established seller, stock made or bought in the UK | No | | UK-established seller, stock imported from outside the UK | Generally no — the scheme targets goods of overseas-established sellers, but check current guidance | | Overseas seller, stock imported into the UK | Yes — the fulfilment house must be FHDDS-registered | | Overseas seller using only Amazon FBA warehouses | Amazon handles its own compliance, but any third-party prep centre or 3PL holding your imported stock is in scope |

The grey areas (mixed ownership structures, UK subsidiaries of overseas groups, goods in transit) are genuinely grey — if your setup is unusual, get advice from an accountant or customs adviser rather than relying on a blog post, including this one.

Questions to ask a prospective 3PL

  1. Are you registered under FHDDS, or does the scheme not apply to your client base? (Either answer can be fine — vagueness is not.)
  2. If I'm an overseas seller, what due-diligence documents will you need from me before you accept my stock?
  3. What happens to my goods if a compliance issue arises with another client?

A competent UK 3PL will answer all three without hesitation. And as the seller, keep your own side clean: if you're overseas-established and selling to UK customers, you almost certainly need a UK VAT registration — speak to an accountant before your first container lands, not after.

How Oakmont handles it

Oakmont takes on both UK and overseas sellers, and we run the due-diligence checks the scheme framework expects — verifying who owns the goods, where they were imported from, and that VAT registration details are in order — before imported stock for an overseas seller comes onto our racking. If you're not sure whether your structure puts you in scope, tell us how the goods are owned and imported when you request a quote and we'll tell you plainly what documents we'd need, before you commit to anything.