Guidance

How to make due diligence checks for Plastic Packaging Tax

Find out how to decide what checks to make if you manufacture, import or buy plastic packaging from another business, and examples of checks you can carry out.

Due diligence is the appropriate and reasonable care a business takes when entering into relationships or contracts with other businesses.

You should carry out due diligence checks for Plastic Packaging Tax if you do any of the following:

  • manufacture plastic packaging components
  • import plastic packaging components
  • buy plastic packaging components from another business

You’ll need to keep details of the checks you’ve carried out, as well as your other 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 reduce the risk of being involved in a supply chain where Plastic Packaging Tax due goes unpaid.

If you do not do these checks or keep enough records of them, you could be held jointly and severally liable (or secondarily liable) for any unpaid Plastic Packaging Tax.

The checks help protect your business, if any business you trade with either:

  • avoids, or evades paying Plastic Packaging Tax
  • does not meet 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

What checks you carry out and how detailed and wide-ranging they are 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 in your supply chain.

You should carry out these checks at least every 12 months. If you become aware of any changes within the 12 months, you must decide if more 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 and due diligence for excise registered businesses.

Examples of due diligence checks

The checks you carry out should be appropriate and proportionate, to help reduce the risks to your business for Plastic Packaging Tax.

If you are involved in the manufacture of 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)
  • getting confirmation of the origin of the recycled plastic your reprocessor supplies

If you import, buy or are involved in the supply chain of 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 against your order and any of the product specifications

If you import, buy or are involved in the supply chain of 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
  • getting 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
Published 30 December 2021
Last updated 15 September 2023 + show all updates
  1. A link to 'due diligence for excise registered businesses' has been added.

  2. Welsh translation added.

  3. First published.