Deposit Return Scheme: letter to HM Treasury February 2023
Letter in response to UK Government confirmation of how VAT will be applied to Scotland’s Deposit Return Scheme.
To: HM Treasury
From: Minister for Green Skills, Circular Economy and Biodiversity, Lorna Slater MSP
Victoria Atkins MP
Financial Secretary to the Treasury
1 Horse Guards Road
13 February 2023
Thank you for your letter of 10 February regarding the application of VAT in relation to Scotland’s Deposit Return Scheme (DRS).
Your letter confirmed that, wherever a container is returned for recycling, and the corresponding deposit is redeemed, VAT will not be applied to the deposit amount but VAT will be due on deposits that have not been redeemed, with the liability falling on the producer who originally issued it.
We welcome this decision which will give businesses the long needed clarity they have been asking for in order to prepare for the launch of Scotland’s DRS in August.
Information will be published on the Scottish Government’s website, and we will work with Circularity Scotland, the scheme administrator, and industry to ensure this information is communicated to businesses.
I understand the UK Government will formally announce the changes, including further details, in the spring budget.
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