Guidance: Records and accounts you must keep for Plastic Packaging Tax

If you’re registered for Plastic Packaging Tax you must keep accounts and records to support the information you submit in your quarterly tax returns.

Your accounts must show how you’ve worked out the figures you submit on your return.

Your records must show the evidence to support these figures.

Your accounts and records must:

• be kept for at least 6 years from the end of the accounting period
• record weight in tonnes, kilograms and grams

Accounts you must keep

You must keep accounts showing how you’ve worked out each entry on your quarterly tax return. Where relevant, your accounts must include:

• a breakdown of the weight of plastic packaging components finished or imported in each period
• the weight of plastic packaging exported in the period on which the tax was deferred
• a breakdown of the weight of any plastic packaging for which a credit is claimed if the packaging has been:
  • exported
  • converted into new packaging components
• any adjustments or corrections made to previous accounting periods — you must include the date and the accounting period they relate to

You must keep accounts by reference to each ‘product line’ that you produce or import. A ‘product line’ is a group of plastic packaging components produced to the same specification.

Records you must keep

You must keep records as evidence to support the information you submit in your tax returns.

Your records must be kept by reference to each product line and show:

• evidence of any exemptions from the tax
• the recycled plastic content, if 30% or more of the plastic used in the component is recycled

For example, if you claim an exemption from Plastic Packaging Tax on the basis that the plastic packaging is used for the immediate packaging of human medicine, you need to hold information supporting your claim (such as the license numbers of the medicines involved).

Records for plastic packaging components that contain recycled plastic

Plastic packaging components are not chargeable for Plastic Packaging Tax when they contain at least 30% recycled plastic as a proportion of the total weight of plastic. If you want to claim this exemption, you must have records that:

• show how you’ve worked out the percentage of recycled plastic
• provide sufficient supporting evidence that recycled plastic was used
• show which dates the evidence relates to, such as the dates that the components were finished or imported
• show which plastic packaging component the percentage relates to, including product lines or production runs
• are an accurate reflection of the proportion of recycled plastic contained in the output materials of that recycling process
• confirm the source of the recycled plastic

For example, sufficient evidence could be the product specification showing the recycled content of a plastic packaging components and details of any due diligence checks you’ve done.

If the specifications or the materials used to make a plastic packaging component change, you must keep separate evidence for each specification.

Records for plastic packaging components you intend to export

If you want to defer paying Plastic Packaging Tax for components you intend to export, you must keep records that show you intend to export them.

The records must be either a document:

• used for any other tax or duty
• which clearly identifies the components to be exported, such as a sales contract or order

The records must:

• be dated at or before the time of production or import
• include details which allow the plastic packaging components you intend to export to be identified
• include the weight of the plastic packaging components which you intend to export

Find examples of documents that could be used as evidence of export.

When identifying components you intend to export, it can be helpful to record information such as batch numbers or equivalent identifiers.

Records for packaging components which have been exported

If you want to cancel your liability for Plastic Packaging Tax, which has been deferred because the components have now been exported, you must keep evidence showing the:

• export has taken place
• weight of the components exported
• date that the export took place

Your records must show that the components have been exported and must be either:

• a document used for any other tax or duty
• another document, such as a contract or order

The record must include details of the plastic packaging components that have been exported, so they can be identified.

Find examples of documents that could be used as evidence of export.

Records to keep to claim a credit

If you want to claim a credit because a plastic packaging component that you’ve paid the tax for has been exported or converted into a new component, you must keep sufficient evidence to support your claim.

The evidence must include details of which plastic packaging components have been exported or converted.

The evidence must include:

• the reason for the claim (either because the components were exported or converted into new components)
• the accounting period which you first had evidence for that the components had been exported or converted into new components
• details of the tax you paid on the components, including:
  • the amount of tax you paid
  • the date you paid the tax
  • how you paid the tax

If a component has been exported, you must keep sufficient evidence that the export took place. You may need to obtain this from another business. Commercially sensitive information can be redacted, provided that the records make clear that the components were exported.

The evidence must show that the components have been exported, they must be either:

• a document for any other tax or duty
• another document, such as an export invoice

If a component has been converted into a new component, you must keep sufficient evidence that the conversion took place. This could be the production records for the new components, showing that the original components were used. You must also give evidence to demonstrate if Plastic Packaging Tax is due for the new component.

Documents that can be used as evidence for Plastic Packaging Tax

You should keep a record of all documents you intend to use to complete your Plastic Packaging Tax return or claim any credits or exemptions.

To show that imported plastic packaging contains at least 30% recycled plastic, you must either:

• provide evidence from the manufacturer of the plastic packaging
• prove that you (or a competent third-party) have a robust supply chain audit that can provide this evidence

This list is not exhaustive. You may use documents that are not listed.

Production specification

Production specifications can be used to show:

• the proportion of recycled plastic
• the weight of plastic packaging
• if packaging is plastic
• if packaging is exempt from the tax

You should carry out due diligence to make sure plastic packaging components meet the product specifications when accounting for Plastic Packaging Tax.

Contracts

Contracts can be used to show:

• the quantity of plastic packaging
• the proportion of recycled plastic
• the weight of plastic packaging
• if packaging is plastic
• if packaging is exempt from the tax

Production certificates and certificates of conformity

Production certificates and certificates of conformity can be used to show the proportion of recycled plastic in plastic packaging.

Business accounting systems

Business accounting systems can be used to show the plastic recycled through the manufacturing process.

Accreditations and international standards

Accreditation bodies, such as the International Organization for Standardization or the British Retail Consortium, use a number of standards.

HMRC recognises that some international standards require businesses to be able to trace the level of recycled plastic in their plastic packaging.

This could help show the:

• proportion and source of the recycled plastic
• weight of the plastic packaging
• if packaging is plastic
• if packaging is exempt from the tax

Quality assurance audits

Quality assurance audits can be an internal audit or an audit carried out by a reputable third-party.

This can show:

• the level of recycled plastic
• the weight of the plastic packaging
• if packaging is plastic
• if packaging is exempt from the tax

Sales and purchase invoices

Sales and purchase invoices can be used as evidence to show:

• the quantities of the plastic packaging supplied
• the weight of the waste
• recycled plastic feedstock
• the date of sale
• the tax paid

The date of sale could help evidence the date the plastic packaging is imported or manufactured.

Environment Agency accreditation and equivalent approvals from other environmental regulators

Businesses can get permits or exemptions for reprocessing waste to create recycled material from:

• the Environment Agency
• Natural Resources Wales
• the Northern Ireland Environment Agency
• the Scottish Environmental Protection Agency

Where reprocessors of waste claim a credit note under the Packaging Recovery Note scheme, they are required to register with the relevant environmental protection agency.

If recycled plastic comes from a registered reprocessor, you can check their registration. This can help to provide evidence of the source of recycled plastic in the plastic packaging.

There are equivalent international accrediting bodies who may be used by importers of recycled plastic. You should keep evidence of any checks carried out by a third party on your behalf, which will be considered by HMRC on a case-by-case basis.

Accreditors will not have an active role in assuring the tax.

Export documents

You can use the following documents as evidence of goods you intend to export or have exported:

• export declarations
• an invoice or packing list that clearly identifies the goods being exported
• transport document (such as a bill of lading, airway bill or road consignment (CMR) note) to show us how the goods were transported
• a document certified by the carrier that the goods were loaded and shipped to a destination outside the UK
• a commercial document, such as a delivery note or invoice signed by the consignee in a third country, certifying the goods have been received
• a document authenticated by a customs authority, certifying that the goods have left the territory of the UK

Creating invoices

If you’re responsible for accounting for the tax, you are encouraged to make the Plastic Packaging Tax you have paid visible to your business customers, and work with them to try and increase the amount of recycled plastic they use wherever possible.

More information about including a Plastic Packaging Tax statement with invoices will be published in due course. We will give businesses time to prepare and make any required changes to their systems.

Charging VAT

If you pay Plastic Packaging Tax on plastic packaging components that you have manufactured or imported, you can choose to increase the price you charge for that packaging to help cover the cost of the tax. This is a commercial decision for you to take.

Plastic Packaging Tax is only paid once when the packaging component is finished or imported. It is not passed down the supply chain as a separately identifiable charge like VAT.

VAT will continue to be payable on the whole price charged for the goods you sell according to VAT rules.

If you increase your price of your plastic packaging because of Plastic Packaging Tax, VAT will be payable on the whole of the new price.