Plastic packaging tax (PPT) update

PPT is due to come into effect from 1 April 2022 – are you ready?

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On 21 March 2022 the Government confirmed that the Plastic Packaging Tax Guidance now has force of law under primary and secondary legislation: The Plastic Packaging Tax (General) Regulations 2022

Companies will be able to register for PPT from 1 April 2022 and once this registration has been completed they will be able to nominate an Agent to submit their returns.

The latest guidance from HMRC on 22 March 2022 gives some clarity on what is/isn’t within the scope of the tax. 

Useful information from HMRC ahead of 1 April 2022 

  • Manufacturers and importers of plastic packaging should work through the 8 steps outlined by HMRC to determine whether they need to register for the tax
  • Businesses will have 30 days to register for the tax from the date they become liable. The registration portal link will be available when the tax launches.
  • A PPT return will not need to be filed until July 2022 at the earliest, however a business may need to register before this time.
  • Anyone importing plastic packaging will need to check who is responsible for reporting and paying PPT.

Some other key points to consider:

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A plastic packaging component is chargeable only when it is finished and has had its last substantial modification before being packed or filled. A substantial modification is any process that changes the weight, structure, shape or thickness of the packaging and HMRC guidance gives more details on what is/isn’t a substantial modification.

Each packaging component must be looked at separately (eg: bottle; lid; label should all be assessed as separate components).

For packaging manufactured in the UK; the business which performs the last substantial modification will be liable to pay the tax.

For imports; it is the business (whether a UK business or an overseas business) who is the importer of record and who imports plastic packaging components which have already undergone their last substantial modification that will be liable to pay the tax.

Registration is required if:

At any time after 1 April 2022 a business expects to import or manufacture at least 10 tonnes of plastic packaging in the following 30 days. In that case registration is required within 30 days of the first day that this condition is met; or

A business has manufactured or imported at least 10 tonnes of plastic packaging in a 12-month period ending on the last day of a calendar month. In that case the business becomes liable for PPT from the first day of the next month and must register by the first day of the subsequent month. In the first year of the tax, a business only needs to register for the tax when the amount of plastic packaging exceeds 10 tonnes in a 12-month period from 1 April 2022 ( so there is no need to look back before 1 April 2022).

If either of these conditions is satisfied, registration is required even if a business’ packaging is not chargeable to PPT.

On 21 January 2022 HMRC updated their guidance on WHO SHOULD REGISTER for the plastic packaging tax.

View the guidance at When you must register for Plastic Packaging Tax.

Are you buying Finished plastic packaging from suppliers?

If you are a business buying FINISHED plastic packaging from other businesses then HMRC have made it clear that you still have a duty to carry out due diligence on your suppliers to ensure that if relevant they have accounted for the tax.  You should therefore maintain records to show your supplier due diligence process.  A good due diligence process will involve checking that your suppliers account for PPT, VAT and any other taxes or duties that are due. If a business can’t demonstrate that it has taken reasonable steps on supplier due diligence it could be held to be secondarily or jointly and severally liable for any unpaid PPT.

For businesses with PPT liabilities they will of course need to determine whether any costs should be passed on to customers.  HMRC are encouraging businesses to disclose the amount of PPT paid to their business customers and then work with them to try and increase the amount of recycled plastic used.  HMRC has delayed the requirement for businesses to include a statement on their invoices regarding how much PPT has been paid but this requirement will likely be re-introduced at a later date.

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