According to Tama Europe, large scale baling contractors could be at risk of fines from HMRC due to non-payment of the plastic packaging tax (PPT), as many are unaware that they are liable.
“At present, only three companies which fall into this bracket are registered with HMRC and pay the tax due,” said Graham Robson, technical manager at Tama Europe (one of the three companies). “All the others either refuse to recognise it, feel they are not liable for it or simply refuse to pay it.
“Worse still, some of these companies are actively advising their customers that such a tax is not required for the baler twine and netwrap they are selling. This has a two-fold effect. Firstly, it could make their customers liable for the unpaid tax and secondly, creates an uneven playing field for companies selling these products.”
The £210.82 per tonne adds about £4.20 to the cost of a 20kg pack of heavy twine and around £6.50 for a 3,000m roll of netwrap. This means that companies paying the tax find themselves at a competitive disadvantage, penalising those abiding by the law.
“At a recent APE-UK meeting [a not-for-profit organisation which promotes sustainable plastic usage], one manufacturer representative, a member of APE-UK, said he disagreed with the tax and admitted to not paying it,” said Mr Robson. “The company recognised that the tax exists, but refused to accept it is liable for it. The tax is the law. Whether one disagrees with it or not, is irrelevant.”
Some international firms are working with UK sales agents. “These agents solicit orders for the product, which are sent directly to dealer customers from the factories, mostly in Portugal and Germany, and invoiced directly to the receiving customers, putting the onus to pay the PPT on them.
“This makes the dealer directly liable for the tax. Similarly, large-scale baling contractors can easily order quantities of twine exceeding 10t in one season, making them, the end user, directly liable. Many merchants or contractors, buying via a self-employed ‘agent’ on behalf of a manufacturer, are totally unaware of their responsibility and legal duty to pay the tax.”
Steve Price, head of agriculture at Zeus Packaging, says his company is paying all the tax demanded under the PPT and has spoken to HMRC to clarify what is required. “Our understanding is that the tax covers netwrap and baler twine which are used for carriage and transportation; plastic used for fermentation like silage pit covers and bale wrap are exempt.”
Although he is bothered by the lack of clarity surrounding the tax, Robert Thornborrow, aftersales manager at Krone, is paying it. “It has not been made clear – I found out about it from a dealer,” he said. “The clarity and guidelines relating to the tax we found vague. The reasoning behind it and how it is being implemented are not clear. I have seen nothing public on this tax anywhere, or the implications for pricing.
“We will pay it because we have to, but the farming community needs to be aware that it is another tax on a product they will buy,” he added. “Companies not paying the tax are running a risk. Other companies that rely more than us on these products will be taking exception to it.”