Companies urged to assess impact of new environmental tax

A new environmental tax being introduced in the coming weeks is likely to increase costs and administrative burdens for companies which use or rely on plastic packaging which is either manufactured in the UK or imported from overseas, a Lancashire tax expert has warned.

The Plastic Packaging Tax (PPT), which will be introduced on April 1, is designed to increase the recycled content of plastic packaging across the UK.

According to Jonathan Main, VAT and indirect taxes partner at MHA Moore and Smalley, the tax has not been widely publicised but is likely to hit a wide range of businesses using plastic in their supply chain, including retail and pharmaceutical businesses and those involved with transporting chemicals.

He said: “The administrative burden will be felt most acutely by businesses who purchase goods and packaging materials from outside the UK.

“To ensure they are compliant with or exempt from PPT, they must obtain evidence from their international suppliers of the recycled content of packaging.”

Jonathan said obtaining this evidence was likely to be a difficult and costly process which could hamper attempts to claim tax exemption. He added the increased administrative burden was likely to lead to increased retail prices.

“Companies purchasing goods from outside the UK will also need to review individual products for the weight of the plastic packaging to be able to accurately report quantities and account for PPT,” Jonathan said.

“This is a dauntingly long and complex process, especially as hundreds of different products enter the UK through today’s complex supply chains. The additional costs will ultimately be passed through to the end consumer.”

The PPT is one of a number of environmentally focused taxes currently being introduced or increased for UK companies, including Landfill Tax, the Aggregates Levy, and Fuel Duty.

Jonathan advised businesses to assess their supply chains and discuss the impacts of the PPT with their professional adviser to ensure they are prepared when the tax is introduced.

MHA Moore and Smalley is hosting three Finance Directors Network spring seminars on March 24 and March 25 which will discuss the changing tax landscape for UK business including the Plastic Packaging Tax.

Companies can register here.