FPA: Foodservice packaging sector ‘not ready’ for plastic tax

Following a members’ survey, the Foodservice Packaging Association (FPA) has warned that the sector is ‘not ready’ for the Plastics Packaging Tax (PPT), due to come into effect on 1 April.

Conducted week commencing 17 January, the survey shows that almost 80 per cent of FPA member companies who sell plastic packaging and products are ‘not yet prepared to administer the tax’. Three-quarters of respondents, the FPA says, have attended an HM Revenue and Customs (HMRC) PPT webinar and/or read the tax guidance notes, noting that many found the resources ‘unhelpful’.

According to the survey, 50 per cent are still unsure which of their packs and products are subject to the tax, with over 60 per cent yet to work out a method for measuring recycled content, and over half not having implemented a system for recording recycled content.

Over 80 per cent of businesses importing packaging stated that they will rely on their overseas suppliers for confirmation of recycled content, with less than 10 per cent considering a third-party certification/evidence.

Invoicing requirements are identified as an area of ‘great concern’, with 77 per cent of respondents currently ‘unclear on requirements’. In a statement, the FPA stated that the source of this confusion could have been ‘HMRC’s original proposals for invoices to include plastic content and volume information for each pack on the invoice’. This requirement has since been removed.

Concerns were also raised over tax avoidance, with 84 per cent of respondents worried that ‘business will avoid paying the tax’.

FPA Executive Director Martin Kersh said: “HMRC should be concerned that if an informed group of businesses is unprepared, where does that leave the many businesses we suspect may not be aware of the tax or, if aware, have given no thought to setting up procedures to manage the tax?

“We think some importers, traders on portals and parts of the economy are unaware of what they consider to be products that are defined by HMRC as packaging. We intend on asking HMRC to step up the provision of information and ensure there is greater clarity in the guidance.

“We know that new taxes take time to bed in, however, there is clearly a feeling among members that the good guys will spend the money and time to comply but there are far too many businesses outside of our immediate sector who might not. Huge effort must go into ensuring a completely level playing field for this tax and we hope the HMRC PPT team is given the resources to achieve this.”

The plastic packaging tax

Initially announced in 2018, the tax will charge a rate of £200 per tonne on UK-manufactured and imported plastic packaging that does not contain at least 30 per cent recycled plastic. HMRC states that there will be a ‘small number of exemptions to the tax’, and with Chancellor Rishi Sunak setting a minimum threshold of 10 tonnes per year to exempt small businesses from disproportionate charges.

Last month, HMRC issued a list of examples of items falling inside and outside the scope of the tax.

Items listed within the scope of the tax were:

• Plastic packaging designed for use at any stage in the supply chain, such as single-use bottles, film designed to protect produce, and film designed to protect a product box and contents.
• Plastic packaging designed as single-use consumer packaging, such as plastic bags, disposable cups, and disposable plastic bowls and plates.

Items exempt from the scope of the tax were:

• Plastic packaging where the primary function is for storage, such as toolboxes, first aid kits, and earphone/earbud cases.
• Plastic packaging that is an integral part of goods, such as inhalers, tea bags, and coffee capsules.
• Plastic packaging to be reused primarily for presentation, such as shop fittings, sales display shelves, and reusable meal trays.
• Transport packaging, defined as material that is used to both: transport multiple sales units or grouped packaging, and prevent damage during transportation.

Compostable and bio-based plastic

Yesterday, in a new policy analysis paper, the Bio-based and Biodegradable Industries Association (BBIA) highlighted the tax’s lack of distinction between conventional and bio-based or compostable plastics.

Addressing the Government, BBIA asserted that compostable and bio-based plastics should be considered ‘the same as [conventional plastic] containing more than 30 per cent recycled content’, pointing out that the content of the material is organic carbon that is recycled through composting.

The tax was named amongst a selection of legislation that the association states conflict with the Government’s strategy on bio-based and compostable materials, creating an environment that is ‘unfavourable to the industry’.