Has anything really changed following Her Majesty’s Revenue and Customs’ brief and subsequent clarification to the landfill tax regime in respect to transfer stations and trommel fines?
The answer, especially since the publishing of the Landfill Tax (Qualifying Material) Order 2011, is arguably nothing.
The initial presumption that all fines should attract the higher rate of tax is incorrect and HMRC has now stated that, albeit in narrow circumstances, trommel fines can, if appropriately evidenced, still attract the lower rate of landfill tax.
Whilst there may be operators that push the boundaries in this area as a matter of course, there are also those that do not.
There have also been a number of comments stating that pricing throughout the waste supply chain has been adversely affected and the perceived uncertainty has caused businesses to ‘shut up shop’.
It was reported that some operators feared that they would still be required to pay a far larger amount of tax than they had been doing before. There has also been suggestion of operators pressing for the lower rate of tax to be applied to some inert materials that are not currently eligible for it.
This suggests that perhaps incorrect rates of tax have been paid in the past and that 15/12 and 18/12 together are simply going to redress the equilibrium here.
HMRC stated in 18/12 that further clarification may be necessary. I would question however what is left to clarify.
The tax legislation is clear in this regard - if an item is contained within the 2011 Order, it is lower rated. If it isn’t in the 2011 order, it is standard rated.
It is the contents of this Order that should therefore be the starting point for those wishing change.
Julian Bowden-Williams, tax partner, Ernst & Young