Supply chain reaction – Plastic Packaging Tax

Hillier Hopkins LLP

Chartered Accountants & Tax Advisers

Call +44 (0)330 024 3200 and discover how we can help you.

A tax on plastic packaging came into force on 1st April 2022. It is a complex tax that hits product manufacturers, retailers, and all aspects of the supply chain.

Failure to carry out the necessary checks and hold sufficient records could result in your business being liable for tax due on plastic packaging that has not been paid by another business in the supply chain.

Plastic Packaging Tax (PPT)  is charged on plastic packaging components manufactured in, or imported into the UK, which contain less than 30% recycled plastic.

A PPT liability arises when a chargeable plastic packaging component is produced in the UK whilst carrying out activities of a business or where it is imported into the UK on behalf of a business.

PPT only applies to ‘finished’ products. A component is ‘finished’ if it has undergone its last substantial modification. The business that undertakes the last substantial modification before the packing or filling process will be liable for the tax.

Manufacturers or importers of 10 or more tonnes of plastic packaging over a 12-month period must register for PPT. Those below this threshold will not be subject to the tax. The rate of tax is £200 per metric tonne of plastic packaging.

Although it is the importer or manufacturer of packaging components that is primarily liable for PPT, others in the supply chain can be made secondarily liable or jointly and severally liable for the tax where they know or ought to have known that PPT has not been paid.

This applies to not just those involved in the manufacturing or importation of plastic components, but to businesses involved in transporting, storing and fulfilment services.

Liability assessment notices

HMRC is taking a keen interest in the new tax and has started issuing secondary liability and joint and several liability assessment notices.

These notices can be issued to any person acting in the course of a related business where another entity in the supply chain has failed to pay PPT and the business knew or ought to have known that it had not paid.

If a notice is issued, it can be reversed or revoked if the business can demonstrate that they took all reasonable steps to verify the supply chain, including conducting proper due diligence on others in the supply chain.

Due Diligence

By carrying out due diligence checks, you are identifying which entity in the supply chain is responsible for accounting for and paying the PPT but also protecting yourself from a possible liability.

HMRC guidance doesn’t make it easy for businesses to know what checks they need to carry out as they do not provide a list, only examples of appropriate checks. Each business needs to decide what checks are relevant, reasonable and proportionate to their circumstances.  Just obtaining the information is not sufficient, you will need to assess its reliability and accuracy. As a minimum, these checks need to be carried out every 12 months.

Businesses in complex supply chains are advised to include the payment of PPT as a contractual term in commercial agreements with their suppliers.

Businesses dealing with goods where a PPT liability could arise should review existing contracts, take PPT into account when preparing new contracts and carry out due diligence on existing suppliers at least every 12 months.

Please get in touch with our expert below if you need advice or support with this.

Do you need extra information?

Ruth Corkin - Prinicipal - VAT and Indirect Tax Advisory at Hillier Hopkins

Ruth has been involved with VAT for over 30 years. She started her VAT career as a Customs and Excise Officer in Essex and then moved into consultancy with a variety of well-known accountancy firms. She is well known in the VAT world and is the proud author of many articles and technical works.

Contact Ruth at or on +44 (0)1908 713860

Based at the following office - Milton Keynes, Watford and London