Getting ready for change
James Lee, Cromwell Polythene’s Managing Director, asks: with the Plastic Packaging Tax on the horizon, are you and your suppliers ready?
With six months to go until the Plastic Packaging Tax (PPT) comes into effect, are you and your suppliers prepared?
From 1 April 2022 this new tax, at a rate of £200 per metric tonne, will apply to plastic packaging containing less than 30% recycled plastic and manufactured in (or imported into) the UK. The aim is to encourage the use of, and increase demand for, recycled plastic within packaging.
Bags and bin liners used by the cleaning industry will be subject to PPT. The primary legislation has been enacted, forming part two of the Finance Act 2021. Secondary legislation will be introduced later in the year with further policy changes possible.
What it means for cleaning
It’s important to engage with your suppliers now to ensure that they’re prepared and that there won’t be any issues with compliance, which could leave you exposed to unexpected costs. Although the importer or manufacturer of packaging components is primarily liable, others in the supply chain can be made secondarily liable, where they know or ought to have known that tax hasn’t been paid.
Manufacturers and importers need to keep records showing the weight and proportion of recycled plastic content, even if it contains more than 30%. Customers may also want more information from you about the types and quantities of material you supply.
PPT needs to be taken into account in contracts, as suppliers or importers of plastic packaging components may need to factor the tax into the pricing and should specify whether prices are PPT inclusive or exclusive.
Invoicing requirements
HMRC initially outlined plans for manufacturers or importers of plastic packaging to record on customer invoices that the tax has been paid. This would require substantial changes to invoice systems to provide analysis for each item covered. In light of industry feedback, HMRC decided this requirement won’t be introduced on 1 April 2022. Further
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information on invoicing will be published in due course, giving businesses more time to prepare.
HMRC is encouraging businesses to consider how they can address this voluntarily in the short term. In the medium term, it will work with industry to agree an effective, practical method. They’ve been seeking businesses to take part in research during October and November, looking for people working in organisations who will assess liability for the tax, with a need to register for tax services, file returns and make payments.
Transparency
Alongside an agreed invoicing method, a globally agreed system for proving recycled content is needed. Unless producers can demonstrate material traceability throughout production processes, in an independently verified way, it will be very hard to combat false claims.
Verification schemes exist which offer certification based on the amount of recycled content, e.g. packaging waste, processed by accredited recyclers and included in their recycled pellet. These schemes are based on a mass balance method and evidenced through third party- auditable record keeping.
EUCertplast is one such scheme, which, together with RecyClass (for brands and products) provides some assurance to buyers of an item’s recycled content. This isn’t the same as guaranteeing the actual recycled content of any specific product, but it’s currently all the industry has at the moment and the closest buyers can get to meaningful assurance.
Are you ready?
Taking a little time to prepare now and changing systems might save you a huge amount of administration time and cost after 1 April 2022. If you have any queries about the guidance, or want to receive regular updates from HMRC about Plastic Packaging Tax, email HERE You can also find useful information on the resources section of our website:
www.cromwellpolythene.co.uk/resources/ twitter.com/TomoCleaning
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