Foodservice packaging suppliers have warned the government they face having to relocate their businesses abroad or close down due to a “devastating” loophole in the government’s EPR tax.
A new body calling itself the Alliance of Foodservice Packaging Suppliers has formed in a bid to persuade Defra to step in. It claims an unintended consequence of the tax has seen the foodservice sector substitute UK packaging firms with alternatives from abroad in a bid to dodge the tax, which came into force in October.
The companies say they supply unfilled packaging into the ethnic foodservice sector, which is used for takeaway outlets to fill with food from a raft of cuisines ranging from Chinese, Indian and Turkish to the pizza and kebab sectors.
The six companies in the sector claim they have a combined turnover of £300m and facilitate approximately £12bn in food sales within the market once the value of takeaway food sold in its packaging is considered.
In their letter to Defra, the companies claim that since the introduction of EPR, which was intended to make producers pay for the cost of packaging recovery, they have seen their businesses progressively taken over by small producers or importers under the £2m-turnover threshold of the tax, who are importing unfilled packaging under their own brand.
Once in the UK the firms, alleged the group, are selling the packaging to a large producer or distributor, and it is then sold to takeaways to be filled, with nobody in the chain paying EPR fees.
“This is costing legitimate UK-based manufacturers and importers millions in lost sales,” says the organisation’s letter to Defra. “Worse still, those involved in this trade are so emboldened by the lack of enforcement that they are also failing to pay other taxes, including plastic packaging tax and VAT. This has encouraged a wave of illegal activity.”
The companies claim the EPR threshold has had huge unintended consequences for firms in the field.
“This threshold simply does not work for packaging manufacturers and importers, regardless of the material used. A business selling unfilled packaging with under £2m in turnover enjoys a significant and unfair price advantage. This has made it now virtually impossible for UK companies to invest in UK manufacturing of unfilled packaging for resale which helps to facilitate the UK takeaway trade.”
One source in the sector, who asked not to be named, told The Grocer: “As things stand, my career in this industry will not survive unless I move operations offshore and manage from abroad – something I do not wish to do.”
No comments yet