A new environmental tax set to be introduced soon is likely to increase costs for firms which use or rely on plastic packaging, a Cumbria tax expert has warned.
The Plastic Packaging Tax will be introduced on April 1 and is designed to increase the recycled content of plastic packaging across the UK.
Jonathan Main, VAT and indirect taxes partner at MHA Moore and Smalley, said the tax had not been widely publicised but was likely to hit a 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 the 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 has offices in Kendal and Lancaster.
