HMRC publish further guidance on landfill tax
Her Majesty’s Revenue and Customs (HMRC) have published further clarification on implementing a lower rate for landfill tax which will apply to waste materials.
The ‘Landfill Tax clarification document’ was published on the 4th of July following a guidance note which sparked debates about changes to Landfill Tax regulations.
The guidance note triggered protests across the construction, skip-hire and waste management industries due to the suggestions of fines on trommel or inert materials being raised by 2,640% immediately therefore, without earlier discussion.
Anti-‘skip-tax’ campaigners received a letter from the Treasury last week stating that the HMRC clarification will now ‘result in waste transfer sites and landfill sites reversing their fee increases’.
The clarification document published this week has been drafted accordingly with parties representing the waste management industry and other stakeholders, in order to act as further guidance and clarification to the recent HMRC briefs 15/12 and 18/12 which relate to Landfill Tax.
The latest interim guidance does not replace previous briefs, it deals with specific queries which have arisen since the two original Briefs were issued and acts to clarify matters relating to the acceptance of materials by landfill operators.
The brief has not been solely drafted by the HMRC, the Environmental Services Association, the Environment Agency and the newly formed skip hire and waste transfer industry trade body the United Resource Operators Consortium (UROC) have all had a hand in drafting the advice.
A few areas of the guidance are still to be published in order to ensure that the lower rate is correctly applied, HMRC are working with the industry to provide further guidance on a number of issues, including:
- The definition of “naturally occurring” in Group 1 of the 2011 Order;
- More objective evidential requirements, including those relating to ‘incidental’ amounts of non-qualifying material in a load that is essentially of qualifying material;
- Guidance on the conditions that must be met where lower rated waste, used for the purposes of filling existing or former quarries, qualifies for exemption from Landfill Tax.
The guidance clarified many areas of uncertainty; starting with evidence:
Operators are to keep “sufficient evidence” to validate applying the lower rate of landfill tax, the guidance states:
“To qualify for the lower rate the waste transfer note, which is required to accompany most movements of waste in the UK, must accurately describe the waste so that it can be related to the terms used in the Landfill Tax (Qualifying Material) Order 2011.”
It also stated that the waste transfer note may apply to both individual loads or as a ‘season ticket’ covering a number of loads over a specific time period.
The HMRC recognise that there may be examples where the basic paperwork relating to the waste may not be sufficient to provide landfill site operators with enough reassurance that the lower rate applies, and that this ‘could be where the European Waste Catalogue code relates to material that could be either standard or lower rated’.
Additionally the HMRC are willing to consider other paperwork, including information from waste producers in order to enable landfill site operators to demonstrate that the waste in a particular batch is made up of qualifying material.
The document also aimed to clarify the discrepancy between the definition of inert materials for tax and environmental purposes.
The document stated:
“The requirements relating to the waste transfer note described above are for tax purposes. They in no way override or affect your obligations in relation to the waste transfer note in environmental protection law including the requirement to define the waste source by reference to the European Waste Catalogue codes.
“The only determining factor as to whether waste is lower rated is whether it is listed in the Landfill Tax (Qualifying Material) Order 2011. Whether or not waste is considered to be inert for environmental protection purposes is not relevant to matters of tax liability. Equally, the fact that waste is listed in the Landfill Tax (Qualifying Material) Order 2011 does not mean that the waste is inert for environmental protection purposes.”
Clarification on the liability of loads and consignments was also offered by the document, it states:
“A consignment of waste sent to landfill will be taxed at the lower rate of Landfill Tax when it consists only of materials which are listed in the Schedule to the Landfill Tax (Qualifying Material) Order 2011 (“the 2011 Order”), as long as the conditions set out in column 3 of the Schedule1 and any note to that group of material in the 2011 Order are met.”
It added that the consignment can contain a number of materials from different Groups with the 2011 Order.
This means that the lower tax rate can be applied to ‘trommel fines’ on the condition that those materials or a mix of those materials are contained within the 2011 Order.
The waste transfer document must however contain an accurate record of the composition of the waste, setting out which qualifying materials are contained within the load.
If you are interested in viewing the document, please click here.
Stakeholders will be kept up-to-date on progress relating to the new guidance, and the HMRC will also undertake discussions with a range of stakeholders whilst developing the policy. The HMRC hope to produce a draft before the end of the summer.