Plastic Packaging Tax: simplifying compliance
Preparing for PPT compliance
As we have discussed in previous articles, Plastic Packaging Tax (PPT) comes into force in the UK from 1 April 2022. It will apply at a rate of £200/tonne on plastic packaging with less than 30% recycled plastic manufactured or imported into the UK (including packaging on goods which are imported) with an estimated 20,000 businesses across a broad range of sectors affected.
Businesses that fall within the regime will need to submit quarterly returns to HMRC detailing weights of plastic packaging components imported into the UK, manufactured in the UK, containing 30% or more recycled content, and/or exempt, amongst other things.
In order to do this, there are two key challenges:
- Getting the data needed to prepare the return; and
- Processing that data and making the tax decisions.
Businesses will need to determine the PPT liability of each of their components. Undertaking this determination manually will be a time-consuming exercise, and there is a risk of inconsistencies and errors if deploying a manual process.
What do you need to do?
Collecting the underlying data and evidence to identify packaging that needs to be reported and be able to report both its weight and recycled content at component level is a significant exercise in itself. Once the data has been collected, a tax decision needs to be undertaken for each component to determine whether PPT is due and, even if PPT is not due, where the weight needs to be reported on the PPT return boxes.
A number of factors need to be considered in order to undertake the necessary determination. These include whether the component is manufactured in or imported into the UK, weight, material composition, recycled content, and the intended use if an exemption, exclusion or deferral is to be applied.
Undertaking this determination manually will be a time consuming exercise, particularly for those with long product lists, and there is a risk of inconsistency and error if deploying a manual process. Technology can help to reduce the burden and improve accuracy and consistency.
Our Tax Technology and PPT specialists have worked together to produce a tool that can be used to determine the PPT treatment of packaging components. This can help relieve the burden of undertaking this process manually, in addition to improving accuracy and consistency where the task is delegated to non-specialists.
Benefits
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How does it work?
Input basic data on the components and materials they are made of
Provide more basic information about the component through a series of guided questions
Work through to the output report which provides a tax decision and information about evidence and reporting requirements
Additional support
Our team can offer a range of support to help your business with PPT implementation, including the creation of more bespoke PPT determination options leveraging the logic engine underpinning the tool but deploying via another technology format or building this into your systems.
For more information, please do get in touch.
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