Landfill tax clarification published by HMRC

By Amy North

Further guidance on when the lower rate of landfill tax applies to waste materials has been published by Her Majestys Revenue and Customs.

Published yesterday (July 4), the interimguidance seeks to clarify matters relating to the acceptance of materials by landfill operators and deals with specific queries that have arisen since two original pieces of guidance, in the form of briefs,were published, on May 18 and June 1.

The HMRC has issued its third piece of guidance on landfill tax in two months
The HMRC has issued its third piece of guidance on landfill tax in two months

The guidance does not replace the previous briefs but is designed to provide clarity.

HMRC has been drafting the advice in partnership with the waste management industry through the Environmental Services Association, the Environment Agency and the skip hire and waste transfer industrys newly-formed trade body the United Resource Operators Consortium (UROC).

As anticipated by letsrecycle.com (see letsrecycle.com story) the guidance offers advice to landfill operators and skip hire and waste transfer firms on how to ensure the lower rate is correctly applied.

However the HMRC said it is still working on clarifications in a few areas for which guidance is yet to be published, 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.

Evidence

The document says that landfill operators must keep sufficient evidence to substantiate 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.

The waste transfer note may apply to individual loads or as a season ticket covering a number of loads sent over a period of time.

HMRC says it recognises 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.

In addition to the descriptions contained in the waste transfer notes, HMRC says it is willing to consider other paperwork, including information from waste producers, to enable landfill site operators to demonstrate that the waste in the consignment is made up of qualifying material.

Inert

“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”

HMRC

Notably, the guidance seeks to clarify the discrepancy between the definition of inert materials for tax and environmental purposes.

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.

Consignment

The guidance also offers clarification on the liability of loads or consignments. 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.

HMRC adds that the consignment can contain a number of materials from different Groups within the 2011 Order. Crucially it means that the lower rate of tax can be applied to trommel fines on the provision that those materials or a mix of those materials are contained within the 2011 Order.

However as previously stated, the waste transfer documentation must accurately record the composition of the waste, setting out which qualifying materials are contained within the load.

Related Links

HMRC guidance [pdf]

The guidance also states that a waste consignment can contain an incidental amount of non-qualifying material and still qualify for the lower rate. As previously stated, the HMRC says it is working to provide further guidance on the definition of incidental amounts.

Following the publication of the latest set of guidance, HMRC says it will review its advice regularly and once finalised will consider the best means of consolidating its Briefs and guidance. HMRC will also update the Landfill Tax Notice, LTF1.

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