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Agreement Templates for Plastic Packaging Where Supplier is Liable for Plastic Packaging tax

May 2022

New template agreements have been created, to cater for the impact of the new plastic packaging tax (PPT) introduced by the Finance Act 2021 on 1 April 2022. The Act imposes a liability for PPT on businesses that produce certain types of plastic packaging or have such packaging imported on their behalf. They will be liable for PPT where the items produced or imported comprise or include any “chargeable plastic packaging component” as defined by the Act.

Where a business liable for PPT on any such plastic packaging component sells to its business customers goods comprising or including that component, it might wish to pass on to those customers an amount equivalent to the amount of PPT, i.e. to recoup it in addition to the price of the goods, rather than absorbing the tax cost that it has had to bear.

Whether or not a business decides to absorb it, it should include in its sales contracts for any goods comprising or including that component a suitable clause to take account of the effects and requirements of the plastic packaging tax provisions of the Finance Act 2021, including the requirement to provide customers with certain information.

To assist suppliers of packaging goods that comprise or include any chargeable plastic packaging components, new template packaging sales agreements have been added which include provisions that take account of PPT and the PPT provisions of the Act. These templates should be adapted as necessary to ensure that their content and terminology are consistent with the terms and conditions to be used when you sell to your business customers.

These new templates are designed for use only when selling goods to business customers, not consumer customers. However, where, as seller, you are directly or indirectly liable for PPT on any packaging and you do not simply want to absorb that tax cost but instead increase your price to consumers to reflect that cost, you should consider what if anything you should include in your terms of sale in relation to that increase.

The first new template is designed for use where the seller manufactures and sells goods which comprise or include any component as defined by the Act, and the buyer intends to use those goods purchased from the supplier to produce new or different goods. The second new template is designed for use when the seller manufactures and sells goods which comprise or include any component as defined by the Act, and the buyer intends to resell those goods purchased from the supplier.

It is recommended that you take legal advice generally in relation to the PPT provisions of the Finance Act 2021 and how they do or might affect your business.

The contents of this Newsletter are for reference purposes only and do not constitute legal advice. Independent legal advice should be sought in relation to any specific legal matter.

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