The waste industry and Government agencies have agreed to work together to show how residue from recycled construction materials can qualify for the lower rate of landfill tax.
HM Revenue and Customs sparked controversy when the tax cost of disposing of certain construction and demolition materials appeared to increase by 2,460% overnight. There were fears that all trommel fines would be charged at the higher rate of £64 a tonne, potentially forcing waste firms to passing the higher costs on to construction companies.
There was then confusion over whether HMRC had made concessions on the types of material subject to the higher rate of tax.
But HMRC has now said it agrees with Defra, the Environment Agency and the waste industry that some trommel fines, left over after materials are recycled, were made solely of materials that qualify for the lower tax rate of £2.50 per tonne.
Background to the landfill tax crisis summit
The meeting between government and waste industry representatives was called in response to confusion over a policy briefing published by HMRC on 18 May and a clarification issued on 1 June.
HMRC’s original briefing acknowledged that mixed loads containing trommel fines and residue from waste transfer stations are “variable in their nature and it is difficult to determine their exact content and origin”.
The clarification said trommel fines that were composed entirely of materials listed in the Landfill Tax (Qualifying Material) Order 2011, such as rock, glass and ceramics, would still be eligible for the lower tax band as long as this could be proved.
Following the clarification some waste firms feared that they would still be required to pay a far larger amount of tax than they had been doing before.
They asked for Wednesday’s meeting to get further explanation of the policy and to press for the lower tax to be applied to some inert materials that are not currently eligible for it.
HMRC’s statement said it agreed at the meeting that skip and waste transfer station operators would “continue to let us know if the intended policy was not having the desired effect”.
A waste expert said HMRC was “absolutely not budging” on the interpretation of materials eligible for the lower tax rate.
Phil Conran, director of consultancy 360 Environmental, said: “There is no change in the definition of what is inert and trommel fines may only go in as inert if they are able to demonstrate that they did not contain material that should have been charged at higher rate. And they spell out very clearly that it must be ‘properly evidenced’.
“I would therefore expect landfill operators to remain cautious and to require either a statement from suppliers that the material conforms with HMRC requirements and/or additional evidence such as sampling.
“There is absolutely no way that I can see that trommel fines from commercial and industrial waste will ever meet that requirement. The 2011 Order is very specific about what can be landfilled as inert. I would therefore suggest that the focus of industry discussions should be about getting that list changed to reflect the best environmental solution.”
Top soil from construction projects, for example, might be considered inert but is not in the list of materials that qualifies for the lower tax rate.
But a waste industry representative who was in the collective meeting thought HMRC had offered concessions. Powerday managing director Mark Bensted said: “It was a very positive meeting but we need to wait and see the final wording HMRC present this to landfill operators and the wider world.
“Inert trommel fines will be charged at the lower rate.”
Labour MPs and Labour peer Lord Kennedy will ask questions about the Government’s handling of the row in the House of Commons and House of Lords next week.
The HMRC briefings were published after waste firms requested clarification of landfill tax policy following a court case between HMRC and Waste Recycling Group.
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