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Fresh landfill tax guidance on way as saga continues

The Government is to publish yet another guidance note on the controversial landfill tax changes - the third in a month - as the chaotic saga rumbles on.

MRW has learned that Her Majesty’s Revenue & Customs (HMRC) is preparing additional guidance on what evidence will be required from companies wishing to dispose waste at the lower landfill tax rate rather than the £64-a-tonne top rate.

It follows three weeks of anger and uncertainty over what many saw as an overnight tax hike of 2,460% to landfill certain construction and demolition, and commercial and industrial, waste (see box).

In a letter to Siobhain McDonagh, the Labour MP who has been campaigning on behalf of skip firms, HMRC said the decision to prepare fresh guidance followed a meeting with waste firms last week.

The letter, dated 12 June and signed by HMRC director Mike Norgrove, said: “Operators requested some additional guidance on the evidential requirements to assist both landfill operators and their customers in ensuring that the correct rate of landfill tax is applied to waste transfer fines.

“We are therefore considering this and will circulate some guidance in draft in due course.”

The guidance represents the third attempt to clarify the situation in under a month.

Meanwhile a minister has attempted to deflect the blame for the saga onto the industry for “misinterpreting” official guidance.

Exchequer secretary David Gauke told the House of Commons: “There have not been any changes on skips.

“There was operational guidance HMRC produced, which I understand was misinterpreted by the industry, and HMRC has clarified that. There has been no change in the policy on skips.”

The waste industry and Government agencies last week agreed to work together to show how residue from recycled construction materials can qualify for the lower rate of landfill tax.

Third time lucky?

  • 18 May: HMRC publishes Revenue & Customs Brief 15/12 Landfill Tax: material used on a landfill site; and classification of waste
  • 1 June: HMRC publishes Revenue & Customs Brief 18/12 Landfill tax: further clarification on Revenue & Customs Brief 15/12
  • 12 June: HMRC informs McDonagh it will publish guidance on “evidential requirements” in due course.  

How the saga began

So-called “inert” fines from trommels and screens (material that is not going to contaminate landfill and does not count towards the EU biodegradable landfill targets) was charged at the lower landfill tax rate of £2.50.

But an HMRC briefing that sparked controversy, published on 18 May, appeared to suggest merchants would have to pay the same full rate of £64-a-tonne to landfill which is levied on “active” material, including non-inert fines that can be biodegradable and create methane.  

In addition, waste or material used to cover waste in landfill areas before they are capped would also be taxed at the full rate. This had previously been regarded as “engineering material”, such as bund walls and caps.

The move related to a judgement in the HMRC v Waste Recycling Group (2008) case.

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