Official estimates, published today (20 June) by HMRC, show the landfill tax gap stands at 14.5% of the theoretical landfill tax liability, or £100 million, for the 2022 to 2023 tax year.
The landfill tax gap has increased from 3.3% in 2005/06 to 14.5% in 2022/23, with a peak of 29% in 2018/19.
HMRC attributes this spike to the inclusion of unauthorised waste sites under landfill tax legislation. Despite a reduction from this peak, the ESA believes the current gap remains “unacceptably high” at £100 million annually.
Additionally, HMRC acknowledged there is a “high” degree of uncertainty in the estimated scale of landfill tax evasion.
Many stakeholders, including the ESA, believe the actual figure could be even higher, based on anecdotal evidence and the findings of the Environment Agency’s latest waste crime survey.
This survey revealed that waste industry respondents estimate one in four organisations involved in handling waste material engage in “misdescription” of waste.
Those that do are able to evade 35% of their landfill tax bill on average. If accurate, this perception would equate to a landfill tax shortfall of £245 million.
‘Impunity’
Sam Corp, head of regulation at the ESA, said: “It appears to legitimate operators that perpetrators of landfill tax fraud are operating with impunity and regulators must get a grip and tackle this issue once and for all, with stronger and more effective enforcement and increased collaboration between revenue and environmental regulators.
“We have heard from several political parties in the run up to the general election of the need to close the UK’s tax gap to fund manifesto and other political commitments. A focus on tackling the Landfill Tax gap would both help plug another gap in the country’s finances as well as helping to create a level playing field for operators in our sector – driving investment in new facilities and jobs to turn more waste into a valuable resource.”
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