30 June 2014

HMRC sets out proposed rules for LOI testing

By Tom Goulding

Landfill operators will have to perform loss on ignition tests for every 1,000 tonnes of waste received from an individual plant, Her Majestys Revenue & Customs (HMRC) has proposed.

And, from April 2015 in order to be considered eligible for the lower rate of landfill tax, customers must ensure any load containing trommel fines has a loss on ignition of 10% or less.

HMRC has outlined its proposals for LOI testing

HMRC has outlined its proposals for LOI testing

The new rules come as part of a consultation published by HMRC today (June 30), which aims to clarify boundaries between higher and lower rates of landfill tax, which stand at 80 per tonne and 2.50 per tonne respectively.

Historically, trommel fines material sent to landfill has attracted the lower rate of tax, but many in the industry have expressed concern that the system is open to exploitation by unscrupulous waste firms.

LOI testing determines the presence of non-inert material in the waste load, which is weighed, heated, cooled and weighed again to calculate how much mass has been lost (see letsrecycle.com story).


According to todays consultation document, the new testing regime will require a waste transfer note to be produced stating that the customer wishes to be charged at the lower rate.

This will be accompanied by pre-acceptance checks, which will see landfill operators issue a questionnaire and declaration for completion by mechanical treatment plant customers to assess whether a test is required.

The questionnaire and declaration will need to be renewed at appropriate intervals, over a minimum of 12 months, to ensure information provided reflects current practice. However, HMRC expects more frequent reviews if a load from a particular plant fails the LOI test.

Risk factors listed by HMRC which would warrant a test include:

  • Waste that is atypical from what is normally expected from a mechanical treatment plant
  • Suspicion of high LOI based on observation
  • Contamination identified when tipping the load
  • Knowledge of the customer e.g. history, treatment process
  • A previous test of said customer resulting in an 8-10% LOI
  • A customer disposing of fewer than 1,000 tonnes of a fines waste stream over six months

Customers also reserve the right to conduct LOI tests on their own fines at an accredited laboratory however this will not alter the obligations placed on landfill operators to conduct their own testing.


Visual inspections will continue to be important with landfill operators required to inspect each load delivered to a site and able to apply a standard rate of landfill tax outright if they deem it appropriate.

And, in order to reduce bias in sampling, HMRC has stated that whole loads must be available and operators must produce a master composite sample made up of six or more sub-samples taken from different areas of a load.

HMRC will also carry out spot checks to ensure landfill operators are complying with the rules.

The cost of LOI tests for landfill operators will be the fee charged by the chosen accredited laboratory plus the administrative/time costs of the pre-acceptance checks and storage of samples. Tests will cost an estimated 10 and take one to two weeks.


Barry Dennis

‘We hope that the introduction of a LOI testing regime will take away the opportunity for the tax to be avoided.’

Barry Dennis, ESA director general

Landfill operators and waste management companies, through the Environmental Services Association and the United Resource Operators Consortium (UROC) which speaks for the skip hire sector, said they welcomed the HMRC proposal.


Barry Dennis, director general of the ESA, said that he was pleased the government had listened to the association’s calls for a more objective regime for determining tax liability of waste fines.

Mr Dennis commented: “Misclassiffication of waste fines for landfill tax purposes distorts the market and has significant economic and environmental impacts. As shown in the recent ESAET report, Waste Crime,tackling Britain’s dirty secret, nearly 160 million per annum is being lostto the public purse due to waste materials, deliberately or otherwise, being incorrectly described as ‘low-rated’ in terms of landfill tax.”

The director general added: “Historically, landfill site operators have had to largely relyon visual checks alone and we hope that the introduction of a LOI testing regime will take away the opportunity for tax to be avoided and will also help to ensure more waste is recycled and recovered.”


Also commenting on the proposals, the United Resource Operators Consortium (UROC) today welcomed the solution but argued there were a number of points that required further feedback from waste operators.

A spokeswoman for UROC said: UROCwelcomes HMRC’s consultation document which consolidates a number of discussions that have taken part over several months with the government-industry working group. We believe that there are still a number of points in the consultation that require further feedback from mechanical waste operators.

‘UROC welcomes HMRC’s consultation document which consolidates a number of discussions that have take part over several months with the government-industry working group.’

United Resource Operators Consortium

We respect that government has listened to us and taken us seriously as a trade body representing the views of those that the “trommel fines” issue affects. The debate is not over and we urge you to become a member of UROC so that your voice can be heard in the final round of consultation.

HMRC aims to review the minimum level of LOI testing after 12 months, and encourages landfill operators to begin conducting pre-acceptance checks on existing customers.

While the 10% threshold has been confirmed as mandatory, operators and customers will have until September 19 to respond to the consultation and propose any changes to the frequency of testing.


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