Pressure is mounting on ministers over controversial landfill tax changes after a coalition of small waste firms urged a re-think and lawyers warned the move would stymie an economic recovery.
The firms said the changes – which have seen the tax cost of disposing of certain materials increase by a staggering 2,460% overnight – threatened to kill off a raft of small and medium size disposal outfits.
Now MRW has learned that 10 firms have written to ministers calling for a re-think on the decision to raise the landfill tax on inert fines from £2.50 to £64 per tonne. Many more are taking up the matter through their MPs.
The letter, seen by MRW, calls for the higher charge to be suspended for six months while a full consultation and transitional arrangements are carried out (see box below).
Addressed to environment secretary Caroline Spelman and communities secretary Eric Pickles, the letter said: “Many jobs at material recovery facilities, transfer stations and related haulage and servicing businesses will be at risk if the financial incentive to maximise recycling and recovery is removed.”
What the waste firms want:
- The imposition of the higher rate of landfill tax in respect of inert fines suspended for six months.
- Formal consultation to take place between the industry and all relevant government departments.
- As part of this consultation exercise, a working group established, with industry representatives and relevant members of the government departments, to discuss and resolve the practical issues of implementing such a change.
- The possibility of an intermediate tax rate for certain materials to be examined.
- Transitional arrangements to be developed in order to ‘phase in’ any increase in landfill tax for inert materials.
Meanwhile, leading lawyers threw their weight behind the argument that the changes could be detrimental to the economy and have an impact well beyond the waste industry.
Kevin Gibbs, director of planning and environmental at law firm DAC Beachcroft, said: “The Treasury has to be looking at how this will impact the economy.
“This may be beneficial to some in the waste industry because it brings clarity to a grey area but this is not beneficial to UK Plc.
“This is not going to be helpful for construction projects. Having a more of a lead-in time may be one way around it.”
David Kerfoot, head of planning and environmental at law firm Aaron and Partners, added that firms challenging the decision through the courts faced an uphill battle.
Kerfoot said: “There is always the prospect of a challenge. But to judicially review HMRC on the interpretation of its landfill tax regime would be very onerous, in my opinion.”
Large waste firms support move
However, large firms remained supportive of the change, saying it would lead to more money being invested in technology to divert waste from landfill.
A Shanks spokesman told MRW: “Shanks welcomes clarification on this issue and is pleased that HMRC has recognised the inappropriate landfill disposal of this material.
“The change in the rate of taxation will allow companies like Shanks to invest in treatment facilities which will divert more material from landfill and make more from waste.”
HMRC & Defra respond
An HMRC spokeswoman said: “HMRC responded to concerns expressed by landfill operators that some companies were not paying the right rate of tax and in the process disadvantaging those who paid the correct rate.
“We have addressed this anomaly by issuing fresh guidance to ensure a level playing field for all businesses working in landfill.”
A Defra spokesperson said:“Landfill tax is a matter for the Treasury and HM Revenue & Customs.
“The new guidance from HM Revenue & Customs should not affect firms that can demonstrate that they are processing naturally occurring rock, sub-soil or stones and will encourage the waste industry to ensure they are accurately describing the contents of any load they are sending to landfill.”