Large baling contractors could be hit by plastic packaging tax

Large-scale baling contractors could be at risk of fines from HMRC due to non-payment of the plastic packaging tax (PPT), with many unaware they are liable for it.

Tama employee with hay bale wrapped in packaging on LAMMA 2024 farming article

The tax applies to manufacturers or importers to the UK of more than 10 tonnes a year of baler twine or netwrap – deemed by HMRC to be ‘packaging’.

“At present, only three companies which fall into this bracket are registered with HMRC and pay the tax due,” says Graham Robson, technical manager at Tama Europe (one of the three companies). “All the others 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.”

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. Agricultural companies paying the PPT are, therefore, finding themselves at a competitive disadvantage to others who aren’t paying it, effectively penalising those who are abiding by the law.

Some international twine and netwrap producers are taking steps to avoid the tax by working with UK-based sales ‘agents’, says Mr Robson. “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.”

Steve Price, head of agriculture at Zeus Packaging, which is paying the tax, 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,” says Mr Price.

Although he is bothered by the lack of clarity surrounding the tax, Robert Thornborrow, aftersales manager at Krone, is paying it. “It has not been made clear – I found out about it from a dealer,” he says. “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.”

LAMMA stand number: Hall 12, stand 324

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