Scott Hawthorne, director of North East-based recycling firm Max Recycle, submitted a freedom of information (FOI) request to local authorities throughout England, Wales and Northern Ireland in January to provide details of their commercial waste operations.
It follows the company’s decision to apply for a Judicial Review to overturn rules that councils should be exempt from paying value added tax (VAT) on trade waste collections.
Max Recycle argues that the current rules, established by her Majesty’s Revenue & Customs (HMRC) in 2011, put private sector firms at a competitive disadvantage and means they must charge lower prices in order to attract customers.
In an attempt to justify the exemption in December 2014, the Local Authority Recycling Advisory Committee (LARAC) argued that household collections remained the top priority for councils, meaning they were unable to compete with the commercial services offered by the private sector.
It added that overturning the exemption would see small businesses suffer – as many based in rural and remote areas of the country do not have access to the services delivered by the private sector (see letsrecycle.com story).
Businesses
In the FOI request, Mr Hawthorne asks councils how many registered businesses and SMEs are within their local authority area, and if they provide commercial waste or recycling collections to them.
The request goes on to ask whether councils supply services to businesses outside of their local authority area, whether they have officers employed to handle commercial waste sales, and whether councils make a profit on commercial waste collections.
The request adds: “Please provide the percentage (or a genuine estimate of the percentage) of commercial waste customers that require you to collect commercial waste, on their understanding that they simply cannot obtain this same service from any other service provider in the area?”
‘Sensitive’
Speaking to letsrecycle.com, Mr Hawthorne said there had so far been a range of responses to the FOI request, with some councils claiming the information required is ‘commercially sensitive’ and could not be disclosed. He added that the date for a tribunal hearing on VAT exemptions is still pending.
LARAC chair Andrew Bird declined to comment on the request, but refuted that councils make a profit margin on collections. He said: “We are only statutorily allowed to cover our costs and we are not allowed to make a profit.”
ESA
The Environmental Services Association (ESA) is also collecting evidence on behalf of HMRC which could demonstrate whether VAT exemptions cause a market distortion.
Jacob Hayler, ESA executive director, said: “HMRC has asked ESA whether we can help gather evidence which may demonstrate that a distortion is occurring in the market. Towards this end, we are investigating how this might best be approached.
“One option we are considering is whether external economic consultants might be able to help us provide the evidence and analysis we need to put this issue to bed once and for all.”
- To join in the debate, head to London for the Commercial Waste Conference 2015 on February 26. For more information please visit the event website.
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