A convenience store retailer has launched a legal challenge to the Scottish government’s deposit return scheme (DRS) due to come into force next year.

Abdul Majid, whose store took part in a DRS trial, is raising judicial review proceedings in the Court of Session against scheme administrator Circularity Scotland.

He is concerned that the retailer handling fee levels will not cover his costs and will be detrimental to his business.

He claims this threatens the viability of his store which serves the community in Bellshill, North Lanarkshire.

The recycling programme encourages consumers to return bottles and cans to shops in return for cash.

The move by Mr Majid has been welcomed by trade body the Scottish Grocers’ Federation (SGF) which supports the scheme but shares his opposition to the level of fees being imposed on retailers.

SGF chief executive Pete Cheema said: “For a long period of time, the SGF has been trying, unsuccessfully to have Circularity Scotland review the retailer handling fee to bring about a more balanced and fair position.”

SGF said it supports the aims of the judicial review proceedings as it is “essential that DRS remains cost-neutral to return-point operators and does not leave them with an additional cost burden or put them out of business.”

Circularity Scotland will administer the scheme and has proposed that retailers get 2.69p for every item deposited. For automated returns, the fee would be 3.55p for the first 8,000 before dropping to 1.35p.

The SGF says those fees will not cover retailers’ costs and would add to other burdens on small firms such as rising energy bills and interest on debt.

The trade body claims that thousands of local convenience stores are at risk due to what it claims is “insufficient funding through an inadequate and potentially illegal retailer handling fee structure”.

It states: “They are faced with the choice of taking on a significant financial burden to set up reverse vending machines, with no means of properly recovering this cost through the scheme, or being forced out the scheme altogether and risk losing all their footfall to large businesses.

“SGF has been and remains fully committed to a fit-for-purpose scheme. But for that to happen, recognition must be given and action taken to address the concerns around retailer handling fee levels.

“We would encourage the Scottish government to intervene and ensure that Circularity Scotland only adhere to what the regulations permit.”

In an earlier response to concerns over the fee structure, Circularity Scotland said: “The return handling fees for the first year of the scheme were calculated in line with an approach agreed by our members, who represent the breadth of drinks producers and retailers in Scotland.

“During the process we consulted closely with industry and appointed independent advisers to develop a detailed cost model aligned to the requirements of the regulations“The model is designed to reflect the variation in costs across different types and sizes of Return Point Operators and the different materials that will be captured under the scheme.”