What Is FHDDS?
The Fulfilment House Due Diligence Scheme (FHDDS) is a mandatory HMRC registration for any business in the UK that stores or fulfils goods on behalf of overseas sellers. Introduced in April 2018, the scheme exists to combat VAT fraud in ecommerce supply chains.
Under FHDDS, fulfilment houses must perform due diligence on every overseas client to verify they are properly registered for UK VAT and complying with customs obligations. The scheme gives HMRC visibility into who is storing goods in the UK and whether appropriate taxes are being paid.
For ecommerce brands expanding into the UK, this means one critical thing: if your UK 3PL is not FHDDS-accredited, your goods can be seized at the border or in-warehouse, and your UK sales operation can be shut down overnight.
Who Needs FHDDS?
FHDDS applies to any business that meets all three of these criteria:
- You store goods in the UK on behalf of a third party
- The goods owner is based outside the UK (or the goods originated from outside the UK)
- The goods are intended for sale (not personal use or samples)
This covers traditional 3PLs, fulfilment warehouses, Amazon FBA prep centres, and any business that holds inventory for overseas ecommerce sellers — including supplement and beauty brands importing from the US.
It's Your 3PL's Obligation — But Your Problem
Important: As an overseas brand, you don't apply for FHDDS yourself. Your UK fulfilment partner does. But if they aren't accredited, you bear the consequences: seized goods, delayed orders, lost customers, and potential HMRC investigation into your VAT compliance.
How the Scheme Works
FHDDS operates as a chain of accountability between HMRC and the fulfilment industry:
- HMRC registers and audits fulfilment houses to verify they perform adequate due diligence on overseas clients
- The fulfilment house checks that each overseas client is VAT-registered, holds a valid EORI number, and is a legitimate business
- Records are maintained for every overseas client and made available to HMRC on request
- Non-compliant fulfilment houses are refused registration, have approval revoked, or face criminal prosecution
FHDDS Accreditation Requirements
- Fit and proper person test: Directors must pass HMRC background checks
- Documented due diligence: Written processes for verifying each overseas seller's VAT registration and business legitimacy
- Comprehensive record keeping: Details of all stored goods — origin, owner, HS codes, declared values
- Ongoing monitoring: Regular reviews of client compliance, not just at onboarding
Documents Your 3PL Should Hold About You
- UK VAT registration certificate
- EORI number verification
- Company registration documents from your home country
- Proof of identity for company directors
- Detailed descriptions of goods (product types, HS codes, declared values)
Launch Fulfilment UK handles this for you. Our white-glove onboarding includes full FHDDS due diligence. We guide you through every requirement so you can focus on selling.
Penalties for Non-Compliance
Criminal offence: Operating an unregistered fulfilment business is a criminal offence under UK law, carrying potential imprisonment and unlimited fines.
- Goods seizure: HMRC can seize your entire UK inventory held in non-compliant warehouses
- Financial penalties: Fines for both the fulfilment house and the overseas seller
- Supply chain disruption: Sudden loss of UK fulfilment while you find an accredited alternative (3-6 months)
- Reputational damage: Customers receive no orders, chargebacks spike, brand reputation destroyed
How to Verify a 3PL's FHDDS Accreditation
- Ask directly for their FHDDS registration number
- Check the HMRC register of approved fulfilment businesses
- Request due diligence documentation — ask what checks they'll perform during onboarding
If a 3PL hesitates or cannot produce their registration number, do not store goods with them.
FHDDS and Bonded Warehousing
FHDDS and bonded warehousing are separate but complementary:
- FHDDS = compliance requirement (due diligence on overseas sellers)
- Bonded warehousing = financial benefit (defer duty and VAT, saving 8-12% on import costs)
The ideal setup for overseas brands entering the UK is a 3PL that holds both: FHDDS accreditation for compliance and HMRC bonded warehouse approval for cash flow optimisation.
FHDDS for Amazon Sellers
Amazon's own FBA warehouses are FHDDS-accredited. However, if you use a third-party FBA prep centre to receive, inspect, or label goods before sending them to Amazon, that prep centre must also be FHDDS-registered.
Many overseas Amazon sellers unknowingly use non-accredited prep centres. If HMRC finds goods stored by an unregistered fulfilment house, the consequences apply regardless of your intention to move goods to Amazon later.
Frequently Asked Questions
Do I need FHDDS if I only sell on Amazon?
Amazon's FBA warehouses are accredited, but any third-party prep service you use must also hold FHDDS. See our full FAQ.
How long does FHDDS accreditation take?
Typically 3-6 months from submission to approval. This is why choosing an already-accredited 3PL is significantly faster.
Can my goods be seized without warning?
Yes. HMRC can visit any fulfilment premises and seize goods without prior notice if the facility is not FHDDS-registered.
Is FHDDS the same as a bonded warehouse licence?
No. FHDDS is a due diligence registration. A bonded warehouse licence is an HMRC authorisation to store goods under duty suspension. A 3PL may hold one or both.