The FPA has been discussing with HMRC the issue of high levels of wastage involved in some production processes, ranging from 20-45%. This means UK producers will be paying tax on this level of waste and scrap, which puts them at a big disadvantage versus importers, who only pay the tax on finished packaging. In response HMRC said: “The position on waste is confirmed in the primary legislation... it is not something we are in a position to change. We are aware of the risks around the position of UK businesses compared to imports. When designing the tax we needed to balance this with the environmental aim of the tax."
HMRC also confirmed the position regarding VAT and the packaging tax, where a producer passes on the tax to a customer. It said: “It is not a requirement for businesses to onward charge customers the amount of Plastic Packaging Tax paid. How businesses manage any additional costs in terms of their pricing as a result of the tax is a commercial decision. If they do decide to incorporate PPT in their prices, this would be treated like any other standard increases in prices."
This clarifies that the decision to pass on the tax charge is taken by the business and, if they choose to do so, it is treated as part of the price to which VAT is charged, effectively charging VAT on the tax.
Is Reusable Cutlery Exempt?
The FPA has also clarified whether redesigning plastic cutlery to be reusable and dishwasher-safe removes the item from the scope of the plastics tax. This is clearly answered in the legislation: Products to which paragraph (2) applies (inclusion in definition of packaging component)..applies to any product that is designed to be suitable, whether alone or in combination, with other products for (a) single-use (even if they are capable of being used on more than one occasion).
In this instance the intention was for the cutlery to be used to eat a single meal even if it can be reused. The FPA will be responding to the technical consultation on the legislation, however HMRC has confirmed the legislation content is set in stone, though there are still many applications for which businesses still won't be sure if they are in or out of scope.
Go to Foodservice Packaging Association | Welcome to the Foodservice Packaging Association for more information about foodservice packaging.
Ends 6 August 2021
Issued on behalf of the Foodservice Packaging Association by Leapfrog PR. Editorial contact is Felicity@Leapfrogpr.com or call 01242 282000 or mobile 07887 608353
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