BDO: Scottish companies face exposure to unpaid tax and penalties over Plastic Packaging Tax registration

BDO: Scottish companies face exposure to unpaid tax and penalties over Plastic Packaging Tax registration

Almost a third (28%) of affected mid-sized businesses in Scotland have yet to register for the newly-introduced Plastic Packaging Tax (PPT), more than four months since it came into force.

According to research by accountancy and business advisory firm, BDO LLP, 15% of those yet to register use more than the kick-off level of 10 tonnes of plastic a year but have not considered PPT, stating that they are monitoring levels of finished plastic packaging that’s either manufactured in, or imported into the UK.

As of 1 April 2022, any company importing or manufacturing more than 10 tonnes of finished plastic packaging, where the plastic used is less than 30% recycled, must register for PPT or risk being exposed to unpaid taxes and penalties. The tax applies to packaging such as plastic drinks bottles, ready meal trays and bubble wrap.

Data released by HMRC prior to the introduction of PPT showed that six in 10 businesses (59%) reporting on plastic packaging did not know the average proportion of recycled plastic content they handled or the proportion of plastic with at least 30% of recycled plastic content. Cost was also cited as the primary factor driving the amount of recycled plastic content in products.

James Paterson, tax partner at BDO LLP, said: “Four months on from the introduction of the Plastic Packaging Tax, there is still some way to go, both in terms of the number of registrations needed, and also the varying states of readiness businesses are in with respect to understanding the requirements of the new tax and the practical changes needed.

“The tax brings a heavy burden of proof from capturing exact data when it comes to record keeping requirements, to obtaining the correct information from overseas suppliers. This is proving to be a very time-consuming exercise. Given that the aim of the tax is to reduce the use of virgin plastic and to encourage recycling, businesses should also be considering whether they can switch to non-taxable packaging, whether plastic or not, with R&D tax credits available for such initiatives.”

The Rethinking the Economy survey showed that 15% of Scottish businesses have placed increasing the sustainability of their business as an immediate priority in the next six months, with the main driver for an increased ESG focus being greater customer demand (31%).

Mr Paterson added: “The introduction of the Plastic Packaging Tax has almost certainly widened discussions about what other ‘green taxes’ should be introduced to drive the sustainability agenda in the coming years. This stretches from introducing more charging points for electric cars, to greater tax incentives to help businesses with affordability.”

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