UK businesses have paid over £3.5m since 2011 for breaching the Packaging Regulations.
The rules mean that any UK company with a turnover over £2m needs to assess how much packaging around goods that they have placed onto the UK market as a result of their business activities. If this packaging exceeds 50 tonnes a year, then companies must pay a levy (green tax), which is used to fund recycling of packaging waste.
The Packaging Regulations were introduced in 1997 to reduce the amount of packaging waste heading to landfill. The tax levied on business is calculated depending on the weight of packaging, by material type that a company ‘places’ onto the UK market during a calendar year. The amount of tax due also depends on the activities performed on the packaging. Companies can be a manufacturer of packaging; a convertor of packaging; a packer/filler of packaging and a seller of packaging around goods. Each separate activity attracts a % of the overall tax; although this is further complicated if a company imports raw materials, components or finished goods into the UK.
The majority of companies join a Packaging Compliance Scheme and one of the UK’s leading schemes is Kite Environmental Solutions. Unfortunately, many companies approached by Kite are unaware of the Regulations and that they might be affected. This then leads to the question – what to do about the previous years?
Kite’s team of specialists have championed a remedy for this under the Civil Sanction rules which were introduced by the Environment Agency in 2011.
These rules enable companies to do an ‘Enforcement Undertaking Offer’ to wipe the slate clean for any years of missed registration. Prior to this the only enforcement tool that the Environment Agency could use was to prosecute companies through the courts.
Enforcement Undertakings are designed to level the playing field, by enabling companies to own-up to having missed registration in previous years and to settle outside of the courts. The process involves assessing the registration and levy costs a company avoided by not registering each year and then offering to pay 110% of these costs to an Environmental Charity. This can be a minefield which is why Kite prepares, submits and manages these Enforcement Undertaking offers on behalf of its Members.
Where the Environment Agency approaches a business about previous year’s non-compliance then companies may be asked to submit a ‘reactive’ Enforcement Undertaking offer. In these circumstances the offer must be 130% of the avoided costs. Since 2011 the majority of the offers have been reactive (64%) implying the Environment Agency found the company not to be compliant. Kite however has been far more positive in helping companies, with 100% of its Enforcement Undertakings being ‘proactive’ reducing the costs to its Members via the lower cost, 110% route.
Kite’s advice is simple: All affected companies should get registered as quickly as possible and Kite specialises in helping companies understand how the Regulations affect them through to completing the annual data assessments on their behalf. If following registration a company should have registered in previous years then Kite’s Enforcement Undertaking team can prepare all the necessary documentation and calculations to get your business back to being compliant.