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ESA raises landfill tax eligibility issue

Landfill site operators have raised fresh questions about how customers dumping waste can prove the material is of the required standard to attract the lower tax rate.

The Environmental Services Association (ESA) said it remained unclear where the onus lay in proving whether or not trommel fines fell under conditions in the Landfill Tax (Qualifying Material) Order 2011.

An ESA statement said: “Following discussions with ESA, Her Majesty’s Revenue and Customs’ second note usefully clarified that fines composed only of ‘qualifying’ material are still eligible for the lower rate.

“However, it remains unclear where the onus to prove that this is the case falls, and what evidence would be deemed sufficient by HMRC. ESA and its members are working with HMRC to see if we can help advise on this issue.

“Our objective remains a policy which is both clear and consistently enforced, and in line with environmental objectives.”

The ESA’s intervention comes with industry bracing itself for a third statement on trommel fines, as tax officials try to resolve the controversial landfill tax dispute.

As MRW revealed, the statement is expected to clarify that trommel fines which fall inside the conditions set in the Landfill Tax (Qualifying Material) Order 2011 should be accepted at the lower rate of £2.50.

This would pave the way for a potentially thorny debate around what standards are needed to prove waste falls under these conditions and therefore escape the top £64 tax rate reserved for active material.

Despite various attempts to clarify the situation, market insiders have told MRW that landfill site operators continue to charge the higher rate of landfill tax for trommel fines, regardless of their composition - this is the nub of where the protracted saga began (see box).

A HMRC spokesman said: “HMRC is continuing to work closely with the industry to understand the impact and to provide assistance where possible.

“A direct dial telephone line (0161 827 0233) is available for anyone with a query on this issue.”

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) were 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, 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 and was charged at the lower rate.

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

Readers' comments (1)

  • Many landfill operators understand the landfill guidance but fear they will have a retrospective bill for the difference in tax rate if their records are less than perfect. My conversations with HMRC to date point to the waste description being the key but unless the legislation or LFT1 guidance is revised any further briefing has to be totally unambiguous or it will prolong the agony for the entire industry.

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