In a piece of legislation that offers commentators a grab-bag of puns, many retailers in England will have to charge at least 5p for single use plastic carrier bags (SUCBs) effective 5 October 2015. The Single Use Carrier Bags Charges (England) Order 2015 is designed to reduce single-use plastic bag usage.
The implementing legislation in its entirety is 20 pages long, although the first 8 contain the legislation, and the remaining 12 pages contain the 7 schedules and an explanatory note. The regulation, which applies only in England, defines SUCBs as “an unused bag made of lightweight plastic material with handles, other than an excluded bag”. The categories of “excluded bags” are a mixed bag, among them are unwrapped blades bags, uncooked meat food bags, and live aquatic creatures bags. The regulation also sets out record-keeping requirements in Schedule 3 as follows:
“1.—(1) A seller must keep a record in relation to a reporting year if required to charge in that year in accordance with article 3.
(2) The record must include the following information—
(a) the number of SUCBs supplied by the seller during the reporting year;
(b) in relation to those bags—
(i) the gross proceeds of the charge;
(ii) the amount of any VAT received by way of the gross proceeds of the charge;
(iii) the amount of any reasonable costs;
(iv) the apportionment between any different kinds of reasonable costs;
(v) the net proceeds of the charge;
(vi) the uses to which the net proceeds of the charge have been put.”
All retailers with at least 250 full-time employees (or their equivalents) must charge the SUCB fee on each bag supplied in England or for the delivery of goods to persons in England, and it must be at least 5p. The amount a retailer charges for the SUCB is VAT inclusive at the UK standard VAT rate of 20%. If the retailer chooses to charge the minimum 5p, the taxable amount is 4.17p and VAT is .83p. Lest unscrupulous retailers become tempted to dig into their bag of tricks and attempt to avoid the SUCB charge, it should be noted that penalties set out in the regulation potentially range from £50 to £20,000. Tax professionals who are concerned with this legislation will only lose sleep over this until 5 October 2022 when the regulation ceases to have effect, but that still potentially means seven years of bags under the eyes.