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Max Recycle takes council VAT challenge to Europe

A Durham waste business has asked the European Commission to intervene in a lengthy dispute over whether local authorities unfairly compete with the private sector by breaking state aid rules.

Max Recycle has long argued that councils gain unfair advantage by not charging VAT for commercial waste collections. 

In June, the company lost a legal case in which it sought to challenge an earlier High Court ruling over whether a local authority was providing commercial waste collection services under section 45(1)(b) of the Environmental Protection Act 1990 was a matter to be determined on a case-by-case basis.

Max Recycle director Scott Hawthorne has lodged a complaint with the Commission asking it to investigate “as a matter of urgency”.

State aid rules prevent public bodies from using their resources to distort competition in business.

Hawthorne has alleged “clear, deliberate and persistent breaches of state aid regulations by Durham County Council”, but said this was only one example of “endemic behaviour by local authorities across the UK, which choose to believe that state aid rules simply do not apply to them, in the matter of using domestic collection infrastructure in order to undercut the commercial waste marketplace”.

In his submission, Hawthorne said: “Councils promote the fact that they do not charge VAT as an inducement to customers and, in some cases, allow their refuse vehicles in bus lanes while private operators are banned.

“These tactics form part of a systematic and targeted attempt by local authorities to actively compete with and undercut private operators, and to take business from them by utilising assets and benefits at their disposal as a result of being public bodies.”

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