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Tax changes rock industry

Changes to landfill tax rules have sent shock waves through the waste industry as the tax cost of disposing of certain materials surged 2,460% overnight.

Waste operators said the “biggest pricing change since the landfill tax was introduced in 1995” could kill off some firms, lead to a possible spike in fly tipping and have far-reaching implications beyond the waste industry.

The changes, announced by Her Majesty’s Revenue and Customs (HMRC) last week, surround the treatment of fines from trommels and screens.

Waste firms will now have to pay £64-a-tonne landfill tax to dispose of certain material - up an enormous 2,460% from the £2.50 tax they were paying before the shake-up (see box for details).  

With waste firms disposing of 1,000s of tonnes of fines a week each, operators say the increased cost of disposal could put operators out of business.   

Sean Heron, managing director of Worsley Plant Limited in Cheshire, told MRW: “It’s sent shock waves through the industry.

“This could put people out of business and it’s more than likely that there will be a lot more illegal fly tipping.”   

The change that’s rocked the industry

So-called “inert” fines from trommels and screens (material that is not going to contaminate landfill and does not count towards the EU biodegradable landfill targets) was charged at the lower landfill tax rate of £2.50.

But now merchants will have to pay the same full rate of £64-a-tonne to landfill which is paid for “active” material, including non-inert fines that can be biodegrade and create methane.  

In addition, waste or material used to cover waste in landfill areas before they are capped will also be taxed at the full rate. This had previously been regarded as “engineering material”, such as bund walls and caps.

The move, outlined in a HMRC briefing document published on 18 May, relates to a judgement in the HMRC v Waste Recycling Group (2008) case.  

Industry experts told MRW they had expected the changes regarding engineering materials but were “surprised by the lack of notice and consultation” surrounding the fines.

A senior figure told MRW: “The transfer stations and materials recovery facilities (MRFs) that deal with inert C&D (construction and demolition) and C&I (commercial and industrial) waste have not had an opportunity to seek to renegotiate with their input customers and the landfills have been required to implement the changes without consultation or notice.”

“This will have an impact on C&D and C&I recycling and will substantially increase the cost of the disposal or recycling of construction and demolition waste at a time when many construction companies are under pressure and the UK needs infrastructure projects.” 

One C&D MRF operator told MRW: “This is the biggest pricing change since the landfill tax was introduced in 1995. I have heard that some construction waste companies have shut the doors and that some are now looking at increasing their rates by 100% and 150%.”   

However, David Palmer-Jones, chief executive at SITA UK, welcomed the move.  

“This has been a grey area, which I know some companies have exploited to great commercial effect, but at the expense of the public purse and completely at odds with the spirit of the landfill tax regime. 

“Landfill tax is to help create a true circular economy and not, inadvertently or otherwise, to enable cheap landfilling.”

Readers' comments (3)

  • An additional issue for the industry is that there will be patchy enforcement. In the North West, some operators are continuing with past practices despite the increase in costs. This is only possible if their fines are disposed of somewhere other than landfill. Since the fines are not inert, this is illegal activity.

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  • These rules were announced last year so why are the skip operators moaning. Its about time that they paid the same tax as everyone else instead of shredding the material and mixing it with inert waste.

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  • it is abvious that the chief executive at SITA UK, was unable to use such fines, however they are used for areas surrounding landfill and are needed. if landfill operators need such materials then the public will pay the price as they did not pay land fill tax on this waste. maybe more thought should go into the companies who abused the system and shredded general waste into fines to avaoid land fill tax but charge customers for it. only the larger operators would not do this leaving smaller companies to take advantage of a loop hole. why dont we tackle to ones who abused this important requirement instead of again putting it down to the general public. or does the government just want the money for the tonnages for this waste at £64.00 per tonne, not bad if you can get it!

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