FHDDS51545 - Penalties, sanctions and offences: penalties – policy: Trading without approval - Determining the quality of disclosure - examples

Example 1

Steve operates a large warehousing and logistics business, which mainly supplies services to UK established businesses. However, a few months ago he started advertising services to overseas businesses importing goods to the UK, and now has contracts with 5 such businesses to provide them with order fulfilment services in the UK. He should have applied for FHDDS approval before he started supplying those services. You receive information from one of Steve’s customers that they asked Steve for his FHDDS Reference Number and he could not provide one. You challenge Steve and he originally denies he makes these sales. When he does admit it, there is some delay in providing the relevant documentation for you to check the nature of his services; who his customers are and whether he is storing imported goods.

The quality of the disclosure is decided as:

Telling/Helping/Giving access 10%/20%/20%

Total 50% (of the full 100% that you can allow for reduction)

So the quality of disclosure reduction is 50%.

Example 2

Lucy operates a business trading as an art dealer and auction house. She had not thought of her business as a fulfilment house, but it does in fact store goods, sometimes for extended periods of time, which have been imported into the UK and are owned by her overseas customers.

Lucy omitted to apply for FHDDS registration. When she discovers that a competitor running a similar business is registered she immediately contacts us, submits an application and gives a full explanation for why she had not applied previously. She gives HMRC access to all her business records as soon as she is asked to do so.

The quality of disclosure is decided as:

Telling/Helping/Giving access 30%/40%/30%

Total 100% (of the full 100%)

So the quality of disclosure reduction is 100%. Lucy is given the full reduction for each element.