Head of Retail & Consumer | Head of Risk Advisory
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This new tax which came into effect on 1 April 2022 has financial, contractual, due diligence and compliance implications for many businesses including retailers and manufacturers.
A survey by waste management company Veolia carried out just before the Plastic Packaging Tax ("PPT") was introduced in April 2022 showed that nearly 80% of businesses were unprepared. Recent surveys show that only 10% of businesses are confident they fully understand the implications of the tax for their business.
It is important PPT doesn’t slip off the radar of businesses that buy, use, sell or make plastic packaging. Even if your business does not have primary responsibility for paying PPT, it is likely you will need to carry out and record supply chain due diligence.
From 1 April 2022 businesses may be liable to pay PPT when producing or importing certain "finished" plastic packaging components that are made up of less than 30% recycled plastic (by weight). Examples include single use bottles, product labels, pallet shrink wrap, gift wrapping, plastic bags and ready meal trays.
A plastic packaging component is chargeable to tax if the proportion of the plastic in the packaging component is made up of less than 30% recycled plastic (by weight). Tax is payable of £200 per metric tonne of chargeable plastic packaging components (subject to a minimum threshold of 10 tonnes).
Businesses may have primary liability to pay PPT to HMRC if they
To have primary responsibility for accounting for PPT businesses need to import or manufacturer 10 or more tonnes of plastic packaging in a 12-month period or will do so in the next 30 days (see slightly different rules that apply between 1 April 2022 and 30 March 2023 below).
Many businesses will purchase finished plastic packaging components from other UK businesses (as opposed to importing them or manufacturing the packaging components themselves). In this scenario their packaging suppliers will hold primary responsibility for accounting to HMRC for, and paying, PPT.
Even if not primarily responsible, businesses should still pay attention to PPT for two reasons:
PPT compliance is important. Penalties include up to 7 years imprisonment and/or a substantial fine for evading payment of PPT (or fraudulently claiming credits or entitlements) or for recklessly or knowingly entering false information into a PPT return.
Administrative or procedural failures in areas such as record keeping, making payments and preparing PPT statements, can lead to a fixed penalty of £500 and a daily penalty of £40.
For more information on what PPT may mean for your business, please contact Tim Williamson or Nathan Peacey.