In an effort to reduce waste levels in Scotland, the Scottish Government’s much talked-about Deposit Return Scheme (DRS) is scheduled to go live in August 2023.

It will see a 20p deposit imposed on drinks sold in containers made from PET plastic, glass or metal. It will be payable at each step in the supply chain, with end-consumers then able to reclaim their 20p by returning the empty container to a retailer. Experts from Brodies’ government and business and commercial services teams explain what drinks producers, importers and retailers need to know about the DRS.

At the time of writing the implementation of the DRS is in some doubt, and may depend on the results of the SNP leadership election and/or the UK Government’s decision on whether to exempt the scheme from the UK Internal Market Act. However, unless and until something changes, we are advising clients to prepare on the assumption that it will come into force as planned.

What drinks are included in the DRS?

The DRS applies to “scheme articles”, meaning all drinks (alcoholic or non-alcoholic) that are:

  • packaged in a single-use container made from PET plastic, glass, steel or aluminium, which is conceived or designed to contain between 50ml and 3 litres and to be sealed at the point of sale (i.e. airtight and watertight), and which the customer cannot return to its point-of-sale state;
  • first made available by the producer to be marketed, offered for sale or sold to consumers on or after 16 August 2023; and
  • made available to be marketed, offered for sale or sold by the producer for the purposes of retail sale in Scotland.

The DRS therefore covers everything from bottled water and fizzy drink cans to bottles of premium whisky.

What about drinks not meeting that definition?

Drinks will be excluded if they are in ‘non-DRS’ packaging (e.g. HDPE plastic, or ‘Tetrapak’-style lined cardboard) or are already in the supply chain before 16 August. Drinks that are both in within-scope packaging and produced after 16 August can only be sold in Scotland if the producer has made them available for sale in Scotland – otherwise it will be an offence to sell the drink to a Scottish consumer. This is intended to keep drinks sold outside Scotland, on which no deposit would have been paid, from entering the DRS system.

Who does the DRS apply to?

The DRS applies not only to Scottish businesses, but also to businesses trading from elsewhere in the UK that supply into the Scottish market.

Drinks producers / importers must register with the Scottish Environment Protection Agency for their products to be sold to Scottish consumers – it will be an offence to sell a scheme article unless its producer / importer is registered.

Retailers will need to charge the deposit on all within-scope products and accept returns of empty containers (unless the retailer only sells online – see below – or secures an exemption). Hospitality venues are retailers for these purposes, though they needn’t charge deposits on drinks sold solely for consumption on the premises or – assuming that is all they sell – accept returns.

What are the key dates?

At present the key dates are:

1 March 2023 – all producer registrations should have been with SEPA (including if registering via the ‘scheme administrator’ Circularity Scotland Limited (“CSL”)) before this cut-off date. The window for retailers to register with CSL (to arrange collection of empty containers) opened on this date.

16 August 2023 – the DRS will go live.

Will there be any further developments before the DRS goes live?

Leaving aside the possibility of the scheme being abandoned or delayed, there have been indications that smaller producers may benefit from some sort of ‘grace period’ on the DRS’s introduction. However, no details are available at the time of writing.

On 15 December the Minister in charge of the scheme (Lorna Slater MSP) advised the Scottish Parliament that the legislation is to be amended so only the largest supermarkets will have to provide a ‘takeback service’ for online deliveries, and that will be phased in between 2023 and 2025; other distance retail will be exempted (though perhaps not forever). However, the relevant legislation had not been published at the time of writing.

The VAT status of scheme articles had been a key outstanding issue but was confirmed by the Treasury on 10 February. If a scheme article is returned for recycling, and the deposit is redeemed, VAT will not be applied to the deposit amount. However, producers will be liable for VAT on deposits paid on their products but not redeemed.

For more information contact:

Charles Livingstone, partner, government and business

0131 656 0273

Grant Strachan, senior associate, commercial services

0131 656 3785