Joint liability for Plastic Packaging Tax

Q: How could this play out?

Illustration only. A food distributor buys 12 tonnes of plastic trays in a quarter from an importer whose price is well below the market rate. The importer files no return and stops trading. HMRC concludes that the distributor dealt in the components and ought to have known the tax was not being paid, and issues a secondary liability notice based on the 12 tonnes: 12 × £228.82 = £2,745.84 at the 2026 to 2027 rate. If the distributor had obtained the importer's written confirmation that the tax was accounted for, checked specifications and weights, queried the low price and refreshed those checks annually, it would have a documented basis for applying under paragraph 5 to have the notice revoked. Without them it has little to argue with.

Section 59 of and Schedule 9 to the Finance Act 2021 let HMRC pursue businesses other than the manufacturer or importer for Plastic Packaging Tax. A secondary liability and assessment notice collects tax that has already gone unpaid, and a joint and several liability notice makes a business liable alongside the taxpayer for the next two years. Both depend on what the recipient knew or ought to have known, which is why HMRC expects every business that makes, imports or buys plastic packaging to carry out and record due diligence checks at least every 12 months.

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What are the two types of notice?

Schedule 9 calls the business that should have paid “P” and the business HMRC pursues “R”.

	Secondary liability and assessment notice	Joint and several liability notice
Looks at	Tax P has already failed to pay for an accounting period	Tax P will be liable for in the future
Effect	R must pay up to the amount P failed to pay	R is jointly and severally liable for P’s tax for accounting periods falling within two years
Schedule 9 paragraphs	1 to 8	9 to 19

In both cases HMRC must give P a copy of the notice, and the tax cannot be collected twice: R pays nothing to the extent P has paid, and the reverse.

Which businesses can be given a notice?

R must be acting in the course of a related business. Paragraph 21 of Schedule 9 defines that widely. It covers a business:

involved in P’s production or importation of chargeable components, including transporting or storing them, or making or supplying the raw or processed materials used to produce them
supplied, directly or indirectly, with chargeable components that P produced or imported
operating an online marketplace or fulfilment business through which P markets or sells the components

For a company, acting in the course of the business includes being a director, manager, secretary or chief executive, so individuals can be within reach as well as the company. HMRC’s guidance gives hauliers, warehouse owners and operators, suppliers and retailers as examples. The wider duties of company officers are covered in our guide to directors’ tax responsibilities.

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When can HMRC issue a secondary liability notice?

Under paragraph 2, HMRC must consider that R is acting in a related business and that either:

R is or has been concerned in P failing to pay, or in steps towards that, and R knows or ought to know it is so concerned, or
R has been involved in transporting, storing or otherwise dealing with a chargeable component, and R knows or ought to know that P has failed to pay the tax due on it.

The notice must explain HMRC’s reasons, state how much P failed to pay, how much R must pay and how that was worked out, and how late payment interest will run. The amount must be just and reasonable. HMRC’s guidance says it will base it on the weight of components connected to R, estimating the weight from available evidence if necessary. R cannot be required to pay within 30 days of the notice.

Paragraph 6 sets the time limit: two years from the day after the end of P’s accounting period, or if later the day a court or tribunal finally decides that P owes the tax. Where either business deliberately brought about the loss of tax, the limit becomes 20 years.

How can a secondary liability notice be challenged?

Paragraph 5 lets R apply to HMRC to revoke the notice on the ground that R took all reasonable steps to establish that P had paid, or intended to pay, all the tax due for the period. R can instead apply to reduce the amount on the ground that it is not just and reasonable. HMRC must give its decision within 30 days of receiving the application. HMRC’s guidance says the application should explain why cancellation or reduction is appropriate, describe the reasonable steps taken, such as due diligence checks, and include calculations where a reduction is sought.

If P’s own liability is later reduced, paragraph 7 requires HMRC to consider reducing R’s, and if P’s liability is cancelled the notice must be revoked and any payment refunded within 30 days.

How does a joint and several liability notice work?

Paragraph 10 allows HMRC to issue the notice where R is in a related business and either R is concerned in steps towards P not paying and knows or ought to know it, or R is dealing with components on which P has not paid and P intends not to pay. The notice makes R liable with P for tax arising in P’s accounting periods, so far as they fall within the next two years.

The first 30 days after the notice is given are a cancellation period. If R tells HMRC within that time that the conditions do not apply, including because it has stopped dealing with P, and HMRC accepts this, the notice is revoked and R owes nothing under it. If R does not notify HMRC, paragraph 13 treats R as knowing about P’s non payment for the period of liability. P can also apply, within 30 days of receiving its copy, to revoke the notice on the ground that HMRC was wrong about P’s conduct or intentions.

HMRC’s guidance confirms that R is only assessed if P does not pay. Any assessment must be just and reasonable, cannot require payment within 30 days, and must be made within two years of the end of P’s accounting period or a final court decision.

What checks should a business make?

HMRC does not publish a list of mandatory checks. Its due diligence guidance says each business must decide what is relevant, reasonable and proportionate for its supply chain, when the checks are done, how often and by whom, and keep records of them alongside its other records. Checks should be made at least every 12 months, and any change during the year should prompt you to consider whether more are needed. They should be more extensive if you rely on information from customers to claim you are not liable, to claim credits or to account for waste removed from packaging.

HMRC’s examples include:

for manufacturers: written confirmation from a customer that it performs the last substantial modification, and confirmation of the origin of recycled plastic from your reprocessor
for buyers of packaging with less than 30% recycled plastic: confirmation of tax status from the supplier, signed documents confirming the tax has been accounted for, product specifications showing weight and composition, and physical checks of weight against orders
for buyers of packaging claimed to contain 30% or more recycled plastic: checking the price reflects market value and asking why if it does not, copies of supplier and reprocessor certifications or audits, physical inspections, and cross checks against websites, specifications and marketing material
for all parties: contract clauses stating whether the packaging is chargeable and who is liable, and checking that evidence supplied by the primarily liable business is valid

How could this play out?

Illustration only. A food distributor buys 12 tonnes of plastic trays in a quarter from an importer whose price is well below the market rate. The importer files no return and stops trading. HMRC concludes that the distributor dealt in the components and ought to have known the tax was not being paid, and issues a secondary liability notice based on the 12 tonnes: 12 × £228.82 = £2,745.84 at the 2026 to 2027 rate.

If the distributor had obtained the importer’s written confirmation that the tax was accounted for, checked specifications and weights, queried the low price and refreshed those checks annually, it would have a documented basis for applying under paragraph 5 to have the notice revoked. Without them it has little to argue with.

What else should businesses know?

HMRC’s penalties guidance lists failing to comply with secondary liability or joint and several liability notices as a relevant requirement, attracting a fixed £500 penalty and then £40 a day until the failure is put right.
Fulfilment houses and online marketplaces are named in the legislation, so they cannot assume the tax belongs only to their clients.
A one off check at onboarding does not meet HMRC’s expectation of at least annual review.
Importers’ consignees are a particular risk; see Plastic Packaging Tax for importers, and our main Plastic Packaging Tax guide for the charge itself.

If HMRC opens a check into your return, tax investigation insurance pays your accountant’s fees. Solar Protect cover pays up to £100,000 with no excess; it never pays tax, interest or penalties. Read how our cover works or get a quote.

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Sources

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 19 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.