Who is responsible for compliance with the packaging regulations? Under the Packaging Regulations, any organisation that has a turnover greater than £2m AND handles more than 50 tonnes of packaging or packaging materials (individually or as a group of businesses) must register with one of the environment agencies or one of 20+ private sector Producer Compliance Schemes e.g. Valpak. Public registers of producers and the public registers of producer compliance schemes are available online here: http://npwd.environment-agency.gov.uk/
There are several packaging activities which are relevant for determining whether a business handles 50 tonnes of packaging or packaging materials, these include: converting packaging materials into packaging, pack-filling, importing or selling.
What constitutes packaging?
In the case of wines and spirits, packaging includes the bottles, corks, caps, labels and the secondary and transit packaging such as pallets, boxes and shrink wrap.
Why the change in interpretation of the definition of ‘importer’?
In the past, when goods entered the UK and were placed into bonded warehouses, there was a broad consensus by trade that it was the company that removed them and paid duty that would need to account for the packaging. Following legal advice in connection with enforcement action that the Environment Agency was undertaking in some cases, the guidance was reviewed to clarify the point at which obligations for importation was incurred. This was not the result of lobbying by any company or trade body.
The Packaging Regulations do not include a separate definition for 'import(er)' to take into account the use by some traders of bonded warehouses: therefore, it was deemed inappropriate to link the importer obligation to the payment of duty. Instead, the terms ‘importer’ and ‘imported’ have their normal meaning. This is considered to link to ‘ownership’ and - in contractual terms - the passing of ‘consideration’ from one legal person to another. Producer Compliance Schemes were informed of the revised position in early 2008 and were asked to communicate it to their members.
Who is the importer?
The first company based in, or with a legal presence in, the United Kingdom which takes ownership of the products and the associated packaging is considered to be the importer for the purpose of the packaging regulations. Importing agents, who act on commission basis and who do not take ownership of the products or packaging will not be the party which has the producer responsibility obligations.
A test of ownership is to ask to whom the ‘consideration’ (ie money) is paid for the imported product. If the payment is made direct by the buyer to an overseas supplier, that buyer would be the obligated importer. If payment is made to a sales office in UK (as opposed to a commission agent), then that suggests that the UK sales office would have been the first person in the UK to take ownership of the products from the overseas supplier.
How does the change affect businesses?
Applying the ordinary meaning of 'import(er)' to the wine and spirits sector has a number of consequences for individual businesses. Some businesses will have a lower obligation than before, and some a higher obligation. There will be some businesses that will fall below the threshold for packaging handled and won’t need to register as a producer; others may need to register for the first time.
Companies need to consider if, in light of the change, they were an importer in 2008 and whether, as a consequence, they meet both of the threshold tests for registration in 2009. If detailed information is not available in respect of imports and the tonnage of imported packaging, a reasonable estimate will be acceptable for the 2009 registration round. Companies are advised to retain a record of their assessment and an explanation of how they have derived their figures.
Registration is an annual process; in future years, all producers will be expected to meet the usual standards of data accuracy.
Registration: The deadline for Registration with the Environment Agencies or Compliance Schemes for 2009 was 7 April 2009. However, the Agency has confirmed that companies can register with a compliance scheme after that date, within reason.
Next Steps: Given the legal advice already received by the Association about the definition of Importer, it is unlikely that further clarification can be achieved in the short term. However, there is likely to be a public consultation on amendments to the Regulations in 2009 and the Association will take the opportunity to seek a change in the definition to take account of the duty suspense system and the point at which the levy should be paid.
