On 14 April 2023, HMRC published detailed guidance on penalties applied to businesses that fail to comply with their plastic packaging tax (PPT) obligations.
The penalties cover:
- failure to register or late registration;
- failure to submit a return or filing late;
- failure to pay a liability or late payment;
- inaccurate returns or other documents; and
- failure to meet other requirements of the tax.
Failure to register or late registration
Businesses must register for PPT if they:
- expect to import into the UK – or manufacture in the UK – 10 tonnes or more of finished plastic packaging components in the next 30 days; or
- have imported into the UK, or manufactured in the UK, 10 tonnes or more of finished plastic packaging components in the last 12 months.
Businesses must register within 30 days of crossing the threshold, which can be made up of a combination of imported and manufactured plastic.
HMRC may charge businesses a ‘failure to notify’ penalty if they do not register for PPT or register late. This will be calculated as a percentage of ‘potential lost revenue’.
The percentage penalty charged will depend on taxpayer behaviour. This will range from 0%-100%. Factors that influence the penalty amount include whether the business makes an ‘unpromoted’ disclosure of its failure to notify and whether the failure to notify is considered non-deliberate, deliberate but not concealed, or deliberate and concealed.
There are more severe penalties for cases of serious non-compliance.
HMRC will not charge a penalty if:
- the business had a reasonable excuse;
- the failure was not deliberate; and
- the business told HMRC about the failure without unreasonable delay.
Failure to submit or a return or filing late
Businesses required to submit PPT returns must do so no later than the last working day of the month following the end of the accounting period. PPT accounting periods cover calendar quarters.
HMRC may charge a £100 penalty the first time a business submits a late return. This penalty may increase to up to £400 for subsequent late returns submitted within 12 months of a previous late return.
If a return has not been filed within six months of the due date, an additional penalty will be charged. This will be the greater of 5% of the PPT owed in that return period or £300.
If a return has still not been filed within 12 months of the due date, HMRC will charge a second additional penalty. This will also be the greater of 5% of the PPT owed in that return period or £300.
Penalties of up to 100% of the PPT owed can be charged if a business is considered to have deliberately withheld information from HMRC that would have allowed HMRC to calculate a PPT liability.
Failure to pay a liability or late payment
If the full amount of PPT owed is not paid by the due date, HMRC will charge a penalty at 5% of the outstanding amount. The due date for payment is the last working day of the month following the end of the accounting period.
Further 5% penalties will be charged if the business has not paid the tax five months and 11 months after the due date.
Inaccurate returns or other documents
HMRC may charge a penalty for inaccurate returns. This will be calculated as a percentage of the potential lost revenue. Like penalties for failure to register for PPT, the percentage, from 0% to 100%, will be based on taxpayer behaviour.
Failure to meet other requirements of the tax
HMRC may charge a fixed £500 penalty if a business does not:
- keep its registration up to date;
- account and pay the tax correctly;
- keep records;
- notify HMRC of a temporary takeover of the business due to death, incapacity or insolvency;
- adhere to secondary liability assessment notices; and
- adhere to joint and several liability notices.
Following the £500 fixed penalty, HMRC will charge a daily penalty of £40 until the requirement is met.
Appeal a penalty
Businesses can appeal penalties they don’t agree with.
The Tax Faculty
ICAEW's Tax Faculty is recognised internationally as a leading authority and source of expertise on taxation. The faculty is the voice of tax for ICAEW, responsible for all submissions to the tax authorities. Join the Faculty for expert guidance and support enabling you to provide the best advice on tax to your clients or business.
More support on tax
ICAEW's Tax Faculty provides technical guidance and practical support on tax practice and policy. You can sign up to the Tax Faculty's free enewsletter (TAXwire) which provides weekly updates on developments in tax.Sign up for TAXwireJoin the Tax Faculty
More from the Tax Faculty
Stay up to date with the latest developments in tax by signing up to the Tax Faculty's weekly e-newsletter
Comprehensive support for Tax practitioners each month from the Tax Faculty and expert contributors.
Expert advice from the Tax Faculty's technical managers on all the developments in tax policy and practice.