High Court Judge Sir Kenneth Parker ruled last month (June 2016) that the tax was not applicable to material used for constructing ‘regulation layers’ at any of Biffa’s landfill cells – and was not limited to a single site as claimed by HMRC.
Sir Kenneth described the case as “without precedent” – referring to aspects of HMRC’s advanced case as “deeply unattractive”.
The decision comes as a number of waste companies and landfill operators continue to chase repayments for tax paid on fluff material used for engineering purposes.
HMRC had initially invited the rebate claims following a landmark ruling by the Court of Appeal in 2008 – but announced it was ending the tax relief in 2012 (see letsrecycle.com story).
HMRC informed Biffa in October 2014 that it was reinstating taxation for material used in constructing a regulation layer – a deposit of materials laid just below the cap to seal the landfill cell. The layer is 300mm deep and comprises soils or fines.
But, the waste firm argued that HMRC’s decision was contrary to its previous ruling that followed the Court of Appeal case in 2009, when it confirmed the regulation layer was not subject to landfill tax.
Biffa also contended that HMRC could not apply the decision retrospectively and order the company to pay landfill tax on material used in the layer prior to its 2012 notice, when it revoked the ruling.
In the course of its legal challenge Biffa did not contest HMRC’s more recent analysis of the regulation layer after 2012 – meaning that the material is currently viewed as being subject to landfill tax.
HMRC
In advancing its case, HMRC had contended that its ruling in the case of Biffa had been confined to a specific site – North Hertfordshire – and ‘could not reasonably be relied upon’ in respect of its other 12 landfills which were then in operation.
It added that further documentation would show how HMRC officers at or about the time of the [2009] Ruling had actually perceived the intended scope, and potential fiscal consequences, of its decision.
However, siding with Biffa, Sir Kenneth said the ruling was ‘clear and unambiguous’ arguing he was ‘in no doubt’ that the ruling was not limited to the North Herts site, but was in fact a general statement by the tax body.
He added that in 2009, Julian Bowden-Williams – then Biffa’s head of Tax and Treasury – had written to HMRC for clarification on its ruling and found nothing in the letter to suggest the layer was unique to the landfill.
“The position reached in this case, as far as I am aware, is without precedent, and I sincerely hope that it will never recur.”
Sir Kenneth Parker
High Court Judge
Sir Kenneth went on to say he could “barely believe” that senior HMRC officers concerned with policy had not been involved in the decision-making leading to the 2009 ruling.
He stated: “It is deeply unattractive, to put the matter at its lowest, for HMRC to advance a case, based upon incomplete material known to the taxpayer, that a particular representation should be given a very narrow scope, when HMRC has in its possession further significant documents that, on a fair reading, show that no such narrow scope was intended at the time by HMRC.
“The position reached in this case, as far as I am aware, is without precedent, and I sincerely hope that it will never recur.”
Consultation
HMRC is currently consulting on ways to ‘simplify’ the criteria around which types of waste qualify for landfill tax from April 2017 as a direct response to ongoing legal challenges from across the industry (see letsrecycle.com story).
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