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Waste carriers exposed to more debt as Landfill Tax rises

Increasing Landfill Tax is exposing waste management companies to more debt as waste producers struggle with rising costs, according to the director of an independent waste and recycling company. As the tax is embodied within the Finance Act, landfill site operators - who charge Landfill Tax to the waste carriers or waste management companies who bring waste to their sites - are covered by bad debt relief. But waste carriers or waste management companies, who pass the Landfill Tax costs on to their waste producer clients, do not have any provision for bad debt relief should their clients go bust. With Landfill Tax due to increase by £8/tonne next year, this is a big and growing problem, according to ISM Waste Services and Recycling director Peter Allen. He told MRW: If a producer goes bust, my exposure to debt is greater but I have no bad debt relief. So Ive effectively become a glorified tax collector for the Government, with greater exposure to debt. In the next 12-18 months, it will not be uncommon for a waste carrier or waste management company to expect 50% of its client invoice to cover Landfill Tax. Landfill Tax is becoming a bigger proportion of our invoices. In addition, Allen explained that one tax invoice sent to his company from a landfill site operator could turn into about 700 invoices for his customers, meaning huge administration costs. One has to collect this tax and a lot of companies are collecting it for nothing, he said. Allens bad debt this year alone has been in the region of £10,000-12,000, costs that his company has had to absorb as various clients have gone bankrupt. He warns that this issue is something the industry needs to be aware of: Its an area that will strike a chord with a lot of waste management companies and waste carriers. It doesnt matter how big or small you are. This affects us all, from Veolia to Biffa to ISM. Its bad for everyone. With every tonne of waste you carry, your exposure to debt grows. Allen wants to raise awareness within the industry and lobby the Government, Treasury and associated groups and stakeholders to get changes made to the Finance Act so that bad debt relief is extended to waste carriers.

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