Centurion VAT – an Indirect Tax specialist team that supports organisations across Wales on Environmental Tax matters - is warning businesses not to be caught out as HMRC indicate their concern about the low level of registrations for the new Plastic Packaging Tax.
Centurion’s Environmental Tax specialist – Mike Trotman – reflects that HMRC have indicated that registrations for the new tax, which was introduced in April of this year, are much lower that they had expected.
As Mike explained:
“PPT came into effect on 1 April 2022, requiring people, who manufactured more than 10 tonnes of taxable products in the previous year or who imported that weight of packaging on products over the same period, to notify HMRC and register for the tax.”
“While the principles of PPT are pretty straightforward – to tax products that contain less than 30% recycled plastic to encourage recycling – determining what products are taxable and who must register has proven to be rather more complicated.”
“We now understand that HMRC are concerned about the low number of PPT registrations. Having expected 10s of thousands of registrations, it seems that the number of applications to register were only some 10% of projected numbers, and HMRC are keen to identify the rest.”
All sectors are currently under financial pressure as inflation rises and with the cost of living and wider supply chain challenges. As a result introducing a new tax and ensuring compliance with it are two different things.
Environmental Tax regimes are used to change the behaviour of businesses and individuals as the UK works to achieve its Net Carbon Zero strategy.
“We’ve seen the success of such taxes such as the Plastic Bag levy and reductions to VAT in the Spring Statement for the installations of Energy Saving Materials are another example to stimulate green energy production, but as ever the obligations to manage these taxes often falls at the door of businesses and organisations already under pressure. The introduction of the Plastic Packaging Tax and HMRC’s concerns over the low registration rate is evidence of that.”
“The public sector is not wholly excluded from PPT. Local authorities, government departments, charities, colleges and universities who import or make plastic products for use in their business activities, will be registerable for PPT, unless they are able to justify to HMRC that they fall below the registration volumes or that their suppliers are taking responsibility for PPT.”
“The challenge for businesses and the public sector is to allocate the resources to compliance of this new tax regime and to do so before HMRC come knocking on their doors.”