Press releases

10 June 2021

BSDA urges HMRC to confirm VAT-exempt status of DRS deposits

As it stands, HMRC is yet to confirm that it will not charge VAT on bottle deposits collected as part of deposit return schemes operating in the UK.

The BSDA – along with the wider UK drinks industry and retail sector – believes that DRS deposits should not be subject to VAT and neither should the deposit be ‘hidden’ within the product price. Making DRS deposits subject to VAT could mean price increases for consumers and more cash-flow impacts for retailers, wholesalers and producers. Such an unprecedented move would also harm the funding and viability of the DRS, sabotaging the goal of reducing litter and increasing recycling.

Despite assurances from the UK Government that the issue would be rectified, HMRC is yet to confirm this to industry. As a result, preparations for Scotland’s DRS are being held up. To reiterate, we fail to see the logic in taxing consumers for doing the right thing and therefore we strongly urge HMRC to confirm the VAT-exempt status of deposits within the Scottish DRS and make clear that the same will apply for the UK Government’s own DRS plans.