Out-Law News 1 min. read

‘Confusion’ among UK businesses over new plastic packaging tax

There is widespread confusion among businesses over the UK’s new plastic packaging tax, according to one legal expert, after it emerged that less than 1,000 firms had signed up to pay the new levy.

New data shows that just 992 UK businesses registered to pay the new tax on plastic packaging, which came into force on 1 April 2022, in the first month of registrations, despite HMRC’s own estimates suggesting as many as 20,000 businesses would be affected. The plastic packaging tax is payable by UK businesses that manufacture or import 10 tonnes or more of plastic packaging – which does not include at least 30% recycled plastic – over a 12-month period.

Abigail McGregor of Pinsent Masons said: “There is a lot of confusion among UK businesses – as well as those who supply into the UK – about who needs to pay the plastic packaging tax, when they need to pay and on which products. Many are unaware the products they make or use are within the scope of the tax, or that they could be liable if another member of their supply chain fails to pay.”

McGregor said the registration figures were surprisingly low, despite the fact that only the UK’s largest suppliers were required to register in the first month. She said it could call into question the £235 million in revenue that HMRC predicted it would collect from the new tax in its first year. She warned that some firms may be unaware they have to pay the tax, since the definition of ‘plastic packaging’ is not always obvious: items such as plastic coat-hangers, for example, are subject to the levy.

Businesses are required to carry out due diligence on their supply chains and can be held jointly liable with suppliers or customers who fail to pay the tax correctly. Deliberate failure to comply carries the risk of criminal charges.

“Although HMRC is unlikely to impose hefty penalties for innocent non-compliance immediately, unfortunately, being unaware of a new tax will not stop HMRC from investigating your business and levying penalties for any underpayments or failure to register and make returns in the longer term. Businesses that ignore the plastic packaging tax may be in for a nasty surprise,” McGregor said.

She added: “It is critically important that companies make sure they know whether they are liable or not – or whether they have sufficient due diligence measures in place – as soon as possible. Any businesses which are unsure should seek professional advice immediately.”

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