Secondary liability
What secondary liability means
You may be liable for unpaid Plastic Packaging Tax due from another person, if you’re involved in the supply chain of plastic packaging components.
If you knew, or should have known, that Plastic Packaging Tax has not been paid, you may be issued with a secondary liability assessment notice for the unpaid tax.
We can issue a secondary liability assessment notice if you have been carrying out activities as part of a related business and either:
- taken steps along with the person with primary liability to not pay the tax
- been involved in one of the following:
- transporting chargeable plastic packaging components (for example, a haulier)
- storing chargeable plastic packaging components (for example, a warehouse owner or operator)
- dealing in chargeable plastic packaging components (for example, a supplier or retailer)
How secondary liability is assessed
We will consider certain factors when deciding whether to issue a secondary liability assessment notice to recover unpaid tax. This may be your relationship with the person with primary liability.
We will also consider the due diligence checks you carry out to confirm the integrity of the supply chain. You need to keep a record of these checks.
Checks you may carry out include, but are not limited to:
- asking for details of the amount of Plastic Packaging Tax paid by your supplier, or the person with primary liability (if different), so you can include this on your invoices
- putting clauses in your commercial agreements or contracts to confirm if the packaging is chargeable to Plastic Packaging Tax and who is liable
- getting evidence that Plastic Packaging Tax has been accounted for from the person with the primary liability
- checking the evidence given to you by the primarily liable person is valid
Find out more about how to make due diligence checks for Plastic Packaging Tax.
How secondary liability is worked out
If you are liable for the unpaid Plastic Packaging Tax of another person, the amount due will be worked out by considering the weight of the plastic packaging components connected to you.
If the weight is not available, we will estimate it by using available evidence or information.
Secondary liability notices
Secondary liability assessment notices can be issued within 2 years, beginning with either the day:
- after the accounting period the notice refers to
- a court or tribunal has agreed an amount of tax is to be paid by the secondary-liable person in the supply chain
If one or more persons took steps to deliberately not pay the tax, a secondary liability and assessment notice can be issued up to 20 years after the accounting period it refers to.
If you are issued with a secondary liability assessment notice, you will be liable to pay with the person who has primary responsibility.
If you do not agree with the secondary liability and assessment notice, or the amount of tax due
You can apply to HMRC for the notice to be cancelled or to reduce the tax amount due. This guide will be updated soon explaining how to apply.
Your application should include:
- why the cancellation or reduction in tax due is appropriate
- what reasonable steps you took to check that the person with primary liability had paid, or intended to pay, the tax for the relevant period (this could be carrying out due diligence checks)
- why you think the amount should be reduced
If you’re applying to reduce the amount of tax due, you must give calculations to explain why you think the amount you are applying for is reasonable.
If the person with primary liability changes their liability for any reason for the same accounting period, we may reconsider the secondary liability assessment notice.
Joint and several liability
What joint and several liability means
If we believe there is a risk that Plastic Packaging Tax will not be paid in the future, we can issue notices making businesses in the supply chain jointly and severally liable for future tax.
You may be jointly and severally liable for Plastic Packaging Tax when you carry out activities as part of a related business if either:
- you know, or should know, that the tax will not be paid by the person with primary liability, and you’ve taken steps to avoid the tax being paid
- you’re involved in one of the following:
- transporting chargeable plastic packaging components when the person with primary liability does not intend to pay the tax (for example, a haulier)
- storing chargeable plastic packaging components when the person with primary liability does not intend to pay the tax (for example, a warehouse owner or operator)
- dealing with chargeable plastic packaging components when the person with primary liability does not intend to pay the tax (for example, a supplier or retailer)
How joint and several liability is assessed
We will consider certain factors when deciding whether to issue a joint and several liability notice. This may be your relationship with the person with primary liability, and what your business does in the supply chain.
We will also consider the due diligence checks you carry out to confirm the integrity of the supply chain. You need to keep a record of these checks.
Checks you may carry out include, but are not limited to:
- putting clauses in your commercial agreements or contracts to confirm if the packaging is chargeable to Plastic Packaging Tax and who is liable
- asking the person with primary liability for information or evidence, to make sure they are paying the tax (you should keep this evidence)
- checking the evidence given to you by the primarily liable person is valid
Find out more about how to make due diligence checks for Plastic Packaging Tax.
How joint and several liability is worked out
If the person with primary liability does not pay the Plastic Packaging Tax due, you may be issued a joint and several liability assessment notice.
The amount due will be worked out by considering the weight of the plastic packaging components connected to you.
If the weight is not available, we will estimate it by using available evidence or information.
Joint and several liability notices
If you’re jointly and severally liable, you will be issued with a notice. The notice will give details of the person with primary liability (who you’re liable with) and the reasons for the decision. A copy will be sent to the person with primary liability.
You will be liable for any non-payment of Plastic Packaging Tax for a period of 2 years from when the notice was issued.
During the 2 years, a joint and severally liable business will only be assessed for payment of the tax if the person with primary liability does not pay.
How a joint and several liability assessment notice is worked out
If the person with primary liability does not pay the Plastic Packaging Tax due, you may be issued a joint and several liability assessment notice.
The amount due will be worked out by considering the weight of the plastic packaging components connected to you.
If the weight is not available, we will estimate it by using available evidence or information.
If you do not agree with a joint and several liability notice
You can request cancellation of a joint and severally liable notice if you contact HMRC within 30 days and explain why you do not meet the conditions to be held joint and severally liable.
This guide will be updated soon explaining how to contact HMRC.
