Consultation on extending the scope of landfill tax to illegal waste sites has been launched by HM Revenue & Customs.
It says the aim is to deter non-compliance by making waste crime less profitable, and reinforcing the principle of ‘the polluter pays’.
The consultation, heralded in the recent Budget, applies only to England and Northern Ireland. Changes could be in place by April 2018.
It says: “Our key objectives are to develop this proposal in a way that will support and complement the activity undertaken by the environmental protection agencies; to provide HMRC with an effective means of pursuing and penalising those involved in the disposal of material at illegal sites; and to level the playing field for the legitimate waste management industry.”
The consultation document notes that the Government has invested an additional £20m in the Environment Agency (EA) because of increased criminal activity in the waste sector.
“This has helped the EA to close down 989 illegal waste sites in England in 2015-16. Despite this increased activity, during the same year, a further 1,016 new illegal waste sites were identified. By the end of 2015-16, there were 622 known illegal waste sites still operating in England,” HMRC notes.
To emphasise that fines levied for regulatory breaches often do not match the profits derived from crime, it quotes a 2016 court case in which the illegal dumping of 6,000 tonnes of waste resulted in fines totalling £170,000. If the illegally dumped material had been liable to landfill tax, it would have meant a tax bill of £500,000, a penalty of up to 100% of the tax and interest – a total tax liability of more than £1m.
HMRC also notes that in 2015-16, the difference between the amount of landfill tax due be collected by HMRC and what was actually collected was estimated at £150m, representing 12% of theoretical liabilities. The methodology does not include an amount for material disposed at waste sites: “This means that the potential revenue lost from material disposed of at illegal waste sites could be significantly higher.”
During consultation in Scotland and Wales on extending the scope to illegal waste sites, the majority of respondents supported the move. HMRC is asking those responding to its consultation if any aspects of the Scottish and Welsh approaches should be considered further.
Questions raised by HMRC for consultation include:
- Is it difficult to distinguish between a site operating without a permit or licence and an exempt site?
- Should all material deposited at an illegal site be taxed, regardless of whether the person making the deposit intended to dispose of it?
- Should liability be extended to people other than the controller of the illegal site?
- Who in the supply chain should be liable for the landfill tax?
- How can HMRC estimate the weight of material at illegal sites?
- Is it reasonable to apply the standard rate of landfill tax to all material disposed of at an illegal site?
- Would the proposed mix of civil and criminal sanctions present a strong deterrent?