Plastic Packaging Tax – One Year On
Andrew Thurston · April 27th 2023 · read
With the one-year anniversary of the Plastic Packaging Tax (PPT) being introduced in the UK, we review our experiences of PPT.
In an announcement issued on the 27th January 2023, HMRC have finally decided not to impose a legal requirement to provide wording on invoices in relation to any applicable Plastic Packaging Tax.
Firstly, there were also some issues with the registration process in the early months, with the way that the tax start date was generated by the online application changing. These were subsequently verified by HMRC after questioning the applicable tax start date, so we had numerous discussions with HMRC regarding this matter to resolve their queries. In some cases the date did not change but, in others, the date had to moved backward. This was not an ideal start to the new tax, but was a minor bump in the road.
Generally, our experiences with PPT have been positive. Clients who’ve engaged MHA have accepted that they need to register and have made all efforts to have the necessary records in place. Currently, only a small number of our clients have the need to claim exemption on the 30% recycled content, but this is partly due to constraints on influence over the sourcing of plastic packaging, not the best intentions to reduce virgin plastic in their supply chain. Hopefully, as many other countries apply similar taxes, the pressure to change to more sustainable packaging will increase the number of products meeting the 30% exemption.
We’ve seen a steady stream of businesses requiring our assistance on this new tax and we helped companies review their records, confirm their registration requirements, and compile and submit the quarterly PPT returns to HMRC.
HMRC are already reviewing Plastic Packaging Tax and have staff engaged in reviewing the registration dates to ascertain whether the correct tax has been paid. These high-level audits will increase as HMRC look to police this tax more vehemently in the coming months, so it is important for businesses, who import goods containing plastic packaging, to be vigilant and review their obligations under PPT, otherwise they could face penalties.
It is important to highlight that this tax is not just applicable to UK businesses. In fact, a number of our PPT clients are overseas companies who have had to register due to their status as the UK importer. As the importer is accountable for the PPT, the commercial terms agreed between parties will affect who is liable to PPT registration.
For overseas businesses who sell goods under the Delivered Duty Paid (DDP) Incoterm, they will be required to register for PPT and pay the tax if they meet the 10MT threshold.
At MHA, we are concerned that this is not highlighted sufficiently as overseas businesses may not be fully aware of these new requirements. In our experience, HMRC have not been issuing penalties for late registration, but this policy is likely to end with the expectation that businesses should be aware of their obligations and be registered at the correct time.
Finally, the recent Spring Budget announced that PPT will increase, in line with the CPI, from the 1st April 2023 to £210.82 per metric tonne.
Find out more
If you would like to discuss the Plastic Packaging Tax and how this impacts your business, please contact one of our Indirect Tax Team using our online enquiry form and a member of the team will be in touch.