Out-Law / Your Daily Need-To-Know

Out-Law News 2 min. read

HMRC withdraws plastic packaging tax invoicing requirements

Legislation requiring the amount of plastic packaging tax (PPT) paid on packaging to be detailed on invoices will not be implemented in the UK, HM Revenue & Customs (HMRC) has confirmed.

The development, communicated to stakeholders by HMRC today, will be welcomed by businesses, according to tax expert Abigail McGregor of Pinsent Masons.

The PPT began to apply from 1 April 2022. It is a tax on plastic packaging manufactured in, or imported into, the UK that does not contain at least 30% recycled plastic.

The PPT legislation provides that a manufacturer or importer of plastic packaging which is liable for PPT must show on any invoice issued to a business customer the amount of PPT that has been paid on the packaging concerned. However, those provisions were not implemented when the PPT regime otherwise took effect last year due to concerns about the ability of businesses to comply with the requirement.

HMRC had, until now, stated that it would proceed with introducing the invoicing requirement, with a good period of notice to enable businesses to update their systems and invoice templates. However, HMRC has now confirmed that it will not make the inclusion of a PPT statement a mandatory requirement. However, it said: “Where possible, we encourage businesses liable to PPT to provide information about the tax paid on invoices to business customers.” 

Abigail McGregor of Pinsent Masons said: “This development will be a very welcome relief to business. The compliance burden of the PPT regime has been substantial to many businesses and the prospect of this additional future burden was causing concern.”

“Concerns included the fact that the requirement did not have a de minimis threshold, such that the sale of a single item wrapped in chargeable plastic could have required a statement on an itemised basis for a low-value piece of plastic film. Even for businesses that have the most high-tech of automated systems, this development would have necessitated system developments for invoicing processes so that they could include the appropriate data,” she said.

“Businesses that are still struggling with their compliance processes for the application of the tax more generally will be glad to hear that the additional invoicing requirement will not be added to that burden. There will of course be some who have already expended time and effort on developing the systems to generate the information – they can now choose whether to proceed to include the information on a voluntary basis,” McGregor said.

The third quarter of the first year of the operation of the PPT regime came to an end in December 2022 and therefore the next round of returns and payments are due at the end of January. McGregor said taxpayers should ensure that they comply with their record keeping, returns and tax payment obligations in order to avoid penalties and urged any businesses uncertain of their tax position to seek professional advice to get up to speed with the application of the tax as soon as possible.  

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