Due diligence is the appropriate and reasonable care a business takes when entering into relations or contracts with other businesses.
You should carry out due diligence checks in respect of Plastic Packaging Tax if you do any of the following:
- manufacture plastic packaging components
- import plastic packaging components
- purchase plastic packaging components from another business
You should do these checks in addition to keeping records and accounts.
Why you should carry out due diligence checks
You should carry out due diligence checks on who you’re doing business with to lessen the risk of being involved in a supply chain where Plastic Packaging Tax due goes unpaid.
You should also keep records of the due diligence checks you carry out.
If you do not do these checks or keep sufficient records of them, you could be held jointly and severally liable (or secondarily liable) for any unpaid Plastic Packaging Tax.
These checks help protect your business if any business you trade with either:
- avoids, or evades paying Plastic Packaging Tax
- does not comply with Plastic Packaging Tax requirements
How to decide what checks to carry out and when to make them
HMRC does not provide a list of checks that must be carried out. You need to decide what checks are relevant, reasonable and proportionate for your business, and:
- when to complete them
- how often they should be completed
- who will be responsible for making them
These checks, and the extent of them, will depend on your personal circumstances and supply chain.
In general, you should carry out due diligence checks to establish the integrity of the suppliers and customers (where appropriate) in your supply chain.
As a minimum, you should do these checks every 12 months. If you become aware of any changes within the 12 months, you must decide if further due diligence checks are required.
The checks should be more extensive if you rely on information from your customers to:
- claim you’re not liable to register or account for Plastic Packaging Tax
- claim any tax credits
- account for waste material they remove from the packaging you supply
Find out more about supply chain due diligence principles.
Examples of due diligence checks
The checks you carry out should be appropriate and proportionate, to help lessen the risks to your business in respect of Plastic Packaging Tax.
If you manufacture plastic packaging components
A check could be (but is not limited to) getting written confirmation from your customer to prove any claim that you’re not liable (for example, if your customer performed the last substantial modification).
If you import or purchase plastic packaging components containing less than 30% recycled plastic
Checks could include (but are not limited to):
- requesting confirmation of the tax status of plastic packaging components from your supplier
- getting signed documents from your supplier confirming that Plastic Packaging Tax has been properly accounted for
- getting product specifications for the packaging components, including the weight and composition of the products
- physically checking the weight of packaging components to your purchase order and any of the product specifications
If you import or purchase plastic packaging components containing 30% or more recycled plastic
Checks could include (but are not limited to):
- checking that the price you pay for packaging components reflects the current market value — if components are offered at a lower market value, you should find out the reason for the low cost
- obtaining copies of any certifications or audits that have been conducted on your suppliers, or the re-processors of recycled plastic
- conducting physical inspections or audits on your packaging supply chain to prove information given by suppliers or customers
- checking details provided against other sources, such as supplier and customer websites, product specifications, sales and marketing information
Due diligence is the appropriate and reasonable care a business takes when entering into relations or contracts with other businesses.
You should carry out due diligence checks in respect of Plastic Packaging Tax if you do any of the following:
- manufacture plastic packaging components
- import plastic packaging components
- purchase plastic packaging components from another business
You should do these checks in addition to keeping records and accounts.
Why you should carry out due diligence checks
You should carry out due diligence checks on who you’re doing business with to lessen the risk of being involved in a supply chain where Plastic Packaging Tax due goes unpaid.
You should also keep records of the due diligence checks you carry out.
If you do not do these checks or keep sufficient records of them, you could be held jointly and severally liable (or secondarily liable) for any unpaid Plastic Packaging Tax.
These checks help protect your business if any business you trade with either:
- avoids, or evades paying Plastic Packaging Tax
- does not comply with Plastic Packaging Tax requirements
How to decide what checks to carry out and when to make them
HMRC does not provide a list of checks that must be carried out. You need to decide what checks are relevant, reasonable and proportionate for your business, and:
- when to complete them
- how often they should be completed
- who will be responsible for making them
These checks, and the extent of them, will depend on your personal circumstances and supply chain.
In general, you should carry out due diligence checks to establish the integrity of the suppliers and customers (where appropriate) in your supply chain.
As a minimum, you should do these checks every 12 months. If you become aware of any changes within the 12 months, you must decide if further due diligence checks are required.
The checks should be more extensive if you rely on information from your customers to:
- claim you’re not liable to register or account for Plastic Packaging Tax
- claim any tax credits
- account for waste material they remove from the packaging you supply
Find out more about supply chain due diligence principles.
Examples of due diligence checks
The checks you carry out should be appropriate and proportionate, to help lessen the risks to your business in respect of Plastic Packaging Tax.
If you manufacture plastic packaging components
A check could be (but is not limited to) getting written confirmation from your customer to prove any claim that you’re not liable (for example, if your customer performed the last substantial modification).
If you import or purchase plastic packaging components containing less than 30% recycled plastic
Checks could include (but are not limited to):
- requesting confirmation of the tax status of plastic packaging components from your supplier
- getting signed documents from your supplier confirming that Plastic Packaging Tax has been properly accounted for
- getting product specifications for the packaging components, including the weight and composition of the products
- physically checking the weight of packaging components to your purchase order and any of the product specifications
If you import or purchase plastic packaging components containing 30% or more recycled plastic
Checks could include (but are not limited to):
- checking that the price you pay for packaging components reflects the current market value — if components are offered at a lower market value, you should find out the reason for the low cost
- obtaining copies of any certifications or audits that have been conducted on your suppliers, or the re-processors of recycled plastic
- conducting physical inspections or audits on your packaging supply chain to prove information given by suppliers or customers
- checking details provided against other sources, such as supplier and customer websites, product specifications, sales and marketing information
