The UK’s Plastic Packaging Tax (PPT) is due to take effect from April 1, 2022 and will be payable by manufacturers and importers of plastic packaging containing less than 30% recycled plastic content at a rate of £200 per metric tonne where certain thresholds are met.
According to the HM Revenue & Customs (HMRC) policy paper, the objective of the PPT is to “provide a clear economic incentive for businesses to use recycled plastic material in plastic packaging”. This will help to create demand for recycled material and in turn stimulate increased levels of recycling and collection of plastic waste, reducing the amount that ends up in landfill or being incinerated.
The primary legislation is set out in the Finance Act 2021 which was enacted in June 2021. The administrative aspects of the PPT will be dealt with in secondary legislation and a consultation on the Plastic Packaging Tax (General) Regulations ran from November 4, 2021 until December 1, 2021. The final version of the legislation is expected to be published soon but registration cannot be completed until 1st April this year.
According to the policy paper, all guidance in respect of the PPT is subject to change while the secondary legislation is finalized.
A crucial aspect of the PPT regime is that downstream businesses that buy plastic packaging on which the tax should have already been paid may be found jointly and severally liable for any unpaid tax. In connection with this, on 30th December 2021, HMRC published guidance on the due diligence checks businesses should undertake in connection with the PPT.
The guidance does not set out a specific list of checks that should be carried out in every case. Rather, it is the responsibility of each business to decide which checks are “relevant, reasonable and proportionate” depending on the businesses’ “personal circumstances and supply chain”.
Ahead of April, it is important that businesses assess whether they will be required to pay the PPT in respect of any plastic packaging that does not meet the 30% threshold. Per the policy paper, even where a business is not required to pay the PPT directly, it will still need to consider what steps should be taken to ensure that it is not involved in a supply chain where the PPT goes unpaid by someone else.
Additional rues for manufactures and importers
Meanwhile, manufacturers and importers producing or importing 10 or more tonnes of plastic packaging over a 12-month period will need to register for the tax by 30th April 2022, regardless of whether they will owe any tax. This includes importers of packaging containing goods, such as plastic bottles filled with drinks.
Her Majesty’s Revenue Services further highlighted that businesses that are members of a group of companies and want to simplify the administration and payment of the Plastic Packaging Tax will be able to appoint a representative member of the group to submit returns and pay the tax for the whole group.
Businesses that manufacture or import plastic packaging will need to consider whether they have a registration obligation. Specific rules will apply for determining the treatment of packaging made from a mixture of plastic and non-plastic materials. Even if businesses determine they have no registration obligation (and therefore no tax liability) they will still need to keep records of quantities manufactured and imported and may need to provide evidence of their assessment to HMRC if required.
Manufacturers or importers responsible for accounting for the tax will need to include a statement confirming that the Plastic Packaging Tax has been paid on any invoices issued to business customers. Furthermore, the current proposals provide that if the relevant obligated business does not account for the tax, other businesses in the supply chain may be found to be secondarily or jointly and severally liable for any unpaid tax.
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