HMRC Seeks To Clarify Landfill Tax “Uncertainty”

landfillHMRC is seeking clarify the definition of a taxable disposal at a landfill site in a new consultation that aims to quash uncertainty.

The government is proposing to amend the criteria for determining when Landfill Tax is due so that all material disposed of at a permitted landfill site is taxable, subject to certain exceptions.

A set of narrowly defined exceptions will be included, consistent with the activities that are not currently taxable.

The Government seeks views on the proposals “to put the definition of a taxable disposal for landfill tax purposes beyond doubt, without altering the scope of the tax”.

The Government seeks views on the proposals “to put the definition of a taxable disposal for landfill tax purposes beyond doubt, without altering the scope of the tax”.

It also wants to gather information and receive views on hazardous waste falling within the scope of the Qualifying Material Order.

Over the last few years the industry has challenged the interpretation of a taxable disposal, following the case of Commissioners for Her Majesty’s Revenue and Customs v Waste Recycling Group Limited [2008] EWCA Civ 849 (the WRG case). In this case, the Court of Appeal found that material put to use on a landfill site as daily cover or to construct roads within a landfill site was not taxable.

Since then the legislation has been changed to clarify the liability of certain activities, including those covered by the WRG case. However, there continues to be considerable challenge by parts of the industry over what constitutes a taxable disposal. This has led to uncertainty and increased complexity in the Landfill Tax system.

Consequently, in Budget 2016 the government announced it would consult on proposals to reform Landfill Tax legislation with the aim of clarifying the areas of uncertainty that have led to litigation.

Hazardous

The criteria for waste material to be liable to the lower rate of Landfill Tax* are set by the Treasury and published in HMRC guidance. One of the criteria is that the waste material must not be hazardous. This is consistent with the environmental logic of the tax.

HMRC says it has identified that some types of waste material are listed in The Landfill Tax (Qualifying Material) Order 2011 (Qualifying Material Order) and liable to the lower rate of Landfill Tax, regardless of their hazardous classification. This contradicts the Treasury criteria and the principle that the more polluting the waste, the more the tax paid.

The Government is therefore taking this opportunity to gather information and receive views on any hazardous waste that falls within the Qualifying Material Order and attracts the lower rate of Landfill Tax.

The government is keen to seeking views from a wide range of stakeholders to establish clear evidence-based rationale for its decisions. We would particularly like to hear from operators of landfill sites, waste producers including energy generators, and other waste industry interested groups, including representative bodies in England, Wales and Northern Ireland.

If the government decides to make legislative changes there will be a further consultation on draft legislation.

The consultation ends 18 August.

For the consultation CLICK HERE

* There are two rates of tax: a standard rate (currently £84.40 per tonne); and a lower rate (currently £2.65 per tonne) for the least polluting material.

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