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Government introduces landfill tax changes

The Government has clarified the rules relating to the Waste Recycling Group landfill case by introducing new legislation that puts a tax on prescribed landfill site activities which came into force on 1 September.

A HM Revenue & Customs spokesman said: Technically it has not reversed the decision relating to the WRG case but the changes that came into force on 1 September have clarified the rules.

Landfill tax is a tax on the disposal of waste. As a result of the changes, prescribed landfill site activities relating to use of material on site fall into the scope of the tax.

The changes follow on from last years Waste Recycling Group vs. HM Revenue & Customs court case (see MRW story). This case ruled to the effect that material received on a landfill site which is put to use on the site is not taxable and that the purpose of the legislation was to tax waste material deposited at landfill sites and not to tax deposits at landfill sties of useful material produced from waste material. WRG used inert material, such as soil and builders rubble, both for daily cover and for site engineering purposes such as roads used to reach the operational areas.

HMRC also confirmed that shredder waste (frag waste) is also subject to the tax.

A HMRC spokesman said: The legislation which came into effect on 1 September which includes the landfill tax addresses the issues raised by the WRG case. The disposal of frag waste to landfill has been subject to tax since the inception of landfill tax in 1996. 

The effect of the WRG case was that the use of waste at a landfill site was not taxable.  Use was interpreted widely to include use for daily cover (that is using non biodegradeable waste to cover the landfill at the end of each day to reduce smells, rats etc).  We understand that frag was used for daily cover in some circumstances.  The judgment meant that frag used for daily cover was not taxable.

The legislation described above brings use of material for daily cover into tax (including use of frag).

The following prescribed landfill site activities are taxable:
* The use of material to create or maintain a temporary haul road. This can include use of material for the construction or maintenance of roads            ;
* The use of material to cover the disposal area during a short-term cessation in landfill disposal activity; 
* The use of material to create or maintain temporary hard standing (means a base within a landfill site on which any landfill site activity such as sorting, treatment, processing, storage or recycling is carried out);
* The use of material to create or maintain a cell bund (means a structure within a disposal area which separates units of waste);
* And the use of material to create or maintain a temporary screening bund (means any structure on a landfill site put in place to protect or conceal any landfill site activity to reduce nuisance from noise) except where the material so used is naturally occurring material extracted from the landfill site in which the temporary screening bund is located.

The landfill tax notice issued by HMRC this month, states that while no tax is due on waste which is subject to processing or sorting in the area of a landfill site prior to the waste being subject to recovery, tax will be due if the site operator does not supply HMRC with information on activities on a landfill site which constitute a taxable disposal and those which are non-taxable.

Waste firm Sita director of external affairs Gev Eduljee questioned why the Government had made a tax on these materials. He said: They have not made the case for taxing these materials on environmental grounds and given no environmental justification in their impact assessment.

In April, the Treasury launched a consultation called Modernising landfill tax legislation.  The consultation considered definitions of a taxable waste at a landfill site and wastes that quality for lower rates of tax.

Wastes that qualify for a lower rate of tax include: coal fly ash (pulverised fuel ash), bottom ash, furnaces slags including slag from waste incineration, used foundry sand, gypsum and brine waste. The consultation closed in July.


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