Wine importers hit by payment chaos in new EPR scheme

Drinks businesses say confidence in the UK Government’s packaging levy has been badly shaken after hundreds of companies were charged multiple times. Industry leaders warn the system is “fundamentally flawed” and already causing financial strain.

Wine businesses have reacted angrily to major glitches in the first payments under the new Extended Producer Responsibility (EPR) rules. A string of importers had their first quarterly Direct Debit payments on Wednesday, taken multiple times in error by scheme administrator PackUK’s financial provider.

Major importer Hallgarten & Novum Wines was charged three times. “This was obviously not a small amount of money taken, and could have financial knock-on effects,” said MD Andrew Bewes. “Whilst we are able to weather the storm, this could have been extremely problematic and does not fill us with confidence for future Direct Debit payments to PackUK.”

The Wine Society was also charged three times, a spokesperson confirmed to db.

Isabelle Clark, co-owner of specialist importer Clark Foyster, was horrified to discover that her firm’s first payment had been taken twice. Even though her company is small enough to be not far above the threshold for paying, she says, “the sums are really big. You could easily be in a situation where it leaves you overdrawn, with payments failing.” She warned of the debacle causing “a further loss of trust in DEFRA”.

Hundreds of businesses affected

DEFRA admitted that a total of 484 businesses were affected. It is not clear how many of these are in the drinks industry. A total of around 4,400 UK businesses are obliged to pay the levy, whose rollout began last year.

A DEFRA spokesperson said: “We recognise the inconvenience this has caused. Our teams are working hard to resolve the issue and refund affected businesses as soon as possible.” The department has said it will carry out a full analysis of the causes of the glitch and implement safeguards to stop it happening again.

The bumpy start to payments is being seen as a disastrous beginning for a scheme that was already unpopular with the industry.

Industry frustration grows

Miles Beale, chief executive of the Wine and Spirit Trade Association, said: “It is extremely frustrating for businesses in this busy Christmas period to have the headache of large amounts of money wrongly being taken from their accounts. This error will do little to reassure businesses and confirms our concerns that the scheme was not ready and should have been delayed.”

Beale added that the WSTA has been in contact with PackUK, who are working to rectify the payment errors. An email sent to businesses today by Jeremy Blake, CEO of PackUK, pledged that refunds would be paid “likely by close of play on Friday 5th December”.

Heavy administrative burden and rising costs

Under EPR, businesses with an annual turnover of at least £1 million and that supply or import more than 25 tonnes of packaging are liable to pay the levy to cover waste collection costs. There are additional rules and financial obligations for larger firms. Planning for the extra administrative burden has not been easy for businesses, not least since so-called “base fees” – £192/tonne for glass – were not confirmed until June of this year.

Wine Society CEO Steve Finlan has warned of the additional burden of administering the scheme. The extra red tape comes in the wake of the huge additional burden on the drinks industry of reformed duty rates, implemented in February this year. Ahead of last week’s Budget, Finlan told the drinks business that over the past two years, selling wine has become “so much harder”, largely because of increased red tape.

On-trade double-charged

Importers with sales to the on-trade have also expressed frustration that those sales are charged under EPR at the same rate as household waste. This is despite the fact that bars and restaurants pay companies such as Biffa separately to collect their waste, including glass and other packaging. This means that drinks providers are effectively charged twice for the collection and recycling of waste. Clark says that around 20 per cent of her firm’s business is double-charged in this way.

Businesses call the scheme ‘a complete mess’

“From the outset, EPR has been a complete mess, and this latest debacle sums it up,” said Hallgarten & Novum’s Bewes. “When the initiative was first proposed, we worked with our industry peers to push for an improved – and workable – definition of EPR for the hospitality sector. However, this was to no avail and we were left with a system that was open to considerable interpretation and fundamentally flawed from the start.”

Related news

EU seeks tariff reprieve ahead of crucial Trump meeting

Ancient winepress and Canaanite shrine unearthed near Megiddo

Latest release from Cuvage represents ‘pinnacle’ of Alta Langa