Plastic Packaging Tax Update - Liability Start Date
Across two days (30 & 31 May), HMRC announced an update to the Plastic Packaging Tax confirming there is no fixed liability start date.
HMRC have recently updated the guidance relating to the Plastic Packaging Tax registration and liability start date. To confirm there is no fixed liability start date as this is unique to each company.
All businesses when registering and identifying the start liability date should apply either the forward look test, or backwards look test!
FORWARD LOOK TEST
You must register if you expect to manufacture or import 10 tonnes or more of finished plastic packaging components within the next 30 days. This test can be applied at any time. If you expect to meet or exceed the 10-tonne threshold, you will be liable from the date you had reason to expect you would reach the threshold. You will have 30 days to register from the date you met or exceeded the threshold.
EXAMPLE: From 1-Apr to 9-Apr a business manufactures 2t of plastic packaging they are not required to register or pay any tax. However, on 11-Apr business receives an order and becomes aware that they will meet the 10t threshold by the 25-Apr. They will be liable to register 11-Apr, paying tax on liable plastic packaging manufactured or imported from 11-Apr and anything before is not taxable.
If you are not liable from the forward look test you should apply the…
BACKWARD LOOK TEST
You must register if you’ve manufactured or imported 10 tonnes or more of finished plastic packaging components in the last 12 months. You should check how much finished plastic packaging components you manufactured and imported each month, over the last 12 months. If you meet the 10-tonne threshold, you will be liable from the first day of the month after the month you met the 10-tonne threshold. You will have 30 days to register from the date you met or exceeded the threshold.
EXAMPLE: On 15-May a business looks back to 1-Apr 2022 and determines they have met the 10t threshold. The tax liability date is 1-Jun 2022, paying tax on liable plastic packaging manufactured or imported from 1-Jun and anything before is not taxable.
If you meet 10-tonne threshold via both tests, your liability start date is April 1st, 2022.
For the full HMRC guidance – Click here.
If you have received an email from HMRC asking you to confirm liability start date. You will need to apply the above tests to calculate your official liability start date. See HMRC guidance - Click here.