Large baling contractors are being warned of the risk of fines from HM Revenue & Customs (HMRC), due to non-payment of the plastic packaging tax (PPT).
The tax applies to manufacturers or importers to the UK of more than 10t/year of baler twine or netwrap. This is deemed by HMRC to be packaging.
Currently, only three companies that fall into this bracket are registered with HMRC and pay the tax.
Technical manager at Tama Europe (one of the three companies registered for PPT), Graham Robson, said all other companies that fall into this bracket 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 them. 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.”
Plastic packaging tax
The £210.82/t tax adds about £4.20 to the cost of a 20kg pack of heavy twine and about £6.50 to a 3,000m roll of netwrap.
APE-UK, a not-for-profit company, aims to promote sustainable plastic products usage and develop national collection schemes for the recovery and recycling of used agricultural plastics.
“At a recent APE-UK meeting, one manufacturer representative, a member of APE-UK, said he disagreed with the tax and admitted to not paying it,” Robson said.
“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 twine and netwrap producers are taking steps to avoid the tax by working with UK-based sales “agents”, Robson said.
“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.”
Clarity
Head of agriculture at Zeus Packaging, Steve Price, said that the company is paying all of 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,” he said.
Aftersales manager at Krone, Robert Thornborrow, said the company is paying it despite the lack of clarity surrounding the tax.
“It has not been made clear – I found out about it from a dealer. 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.
“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.”
