‘Disappointing’ lack of detail in new HMRC guidance on plastic packaging tax

Abigail McGregor of Pinsent Masons said the guidance, published by HM Revenue & Customs last week, left “anyone who had been hoping for greater clarity disappointed.” She added: “These provisions have been in force since PPT came into force in April 2022, but businesses which don’t have primary liability for PPT have been in the dark as to how HMRC is planning to approach them.”

“It is unsurprising that officials have not prioritised this guidance, since their focus has been on ensuring or encouraging compliance among manufacturers and importers who have the primary liability. However, the delay and lack of detail is not helpful to those who simply want to make sure they are compliant,” said McGregor.

According to the new guidance, HMRC can, when certain conditions are met, issue notices to businesses which have not directly imported or manufactured chargeable plastic packaging. Notices can be issued to those involved in transporting chargeable packaging, such as hauliers, as well as those who store chargeable packaging like warehouse operators, and suppliers and retailers that deal with chargeable packaging.

The guidance does not offer wider advice to other groups specifically identified in the PPT legislation, including those involved in marketing and sale of chargeable packaging as an operator of an online marketplace or fulfilment business. “Participants in these areas of the UK market will be disappointed at the lack of clarity,” said McGregor.

In most cases, for HMRC to issue a notice, the recipient must be classified as someone who knew – or should have known – that the PPT was not being, or would not be, paid. Once a notice has been issued to a business, that business becomes liable for the PPT that should have been paid by another person in the supply chain – providing the officials with another avenue to recover any owed tax. While secondary liability notices are intended to capture past unpaid PPT, joint and several liability notices are intended to capture future PPT – i.e. any tax owed in the two years after the notice is issued.

According to HMRC, it expects businesses in the supply chain which don’t have primary liability to ask for details of the amount of PPT paid by their suppliers and to include terms in contractual arrangements to confirm whether packaging is chargeable. They should also obtain evidence that PPT has been paid by the primary obligor. HMRC said supply chain participants must also verify the evidence they receive.

McGregor said: “The guidance is extremely high level with very little detail on what HMRC expects to see, or how it will approach the use of these powers. In fact, the key recommendations don’t even include all of the items that are already set out in the regulations, which list the items that HMRC may take into account when deciding whether to issue the notices. There is no guidance on the application of the ‘known or should have known’ test in the context of PPT. Supply chain participants will certainly be hoping that more detailed guidance on these issues is forthcoming.”