22 April 2021 by Joshua Doherty

HMRC wins appeal over 2020 landfill fluff ruling

The Court of Appeal has today (22 April) unanimously allowed an appeal by HMRC against a ruling last year which said waste deposited as fluff at landfill sites was not taxable.

In a decision handed down this morning, three judges at the at the Court of Appeal (Civil Division) all ruled in favour of HMRC, saying the use of residual waste as fluff at landfill sites does not “negate the otherwise obvious intention to discard it”.

The case was heard between 23-26 March in the Court of Appeal (Civil Division) at the Royal Courts of Justice, London

This overturns a previous successful appeal from the waste companies at the centre of the dispute Biffa, Veolia and Devon Waste Management, which said fluff was not liable to tax because it served a use (see letsrecycle.com story).

It is thought the long-running dispute could be worth in excess of £300 million worth of landfill tax, and the case could even end up at the UK Supreme Court.

HMRC’s appeal was heard between 23-26 March 2021 (see letsrecycle.com story). The judges focused on HMRC’s case, which hinged on its belief that the use of residual waste as fluff for protecting the bottom and top surface from sharp objects is not the “reason” it is placed in a landfill cell.

Liability for tax at the time of the initial dispute in 2008 was the Finance Act 1996. In short, this said  tax shall be charged on a “taxable disposal”. One condition for a disposal to be a taxable disposal is that it is “a disposal of material as waste”. This point is at the centre of the dispute, with much of a focus on the concept of ‘discard’.


At the Appeals Court,  three judges generally deliver separate verdicts.

Justice Vivien Rose raised the difficulty of working out how much fluff was really needed at the bottom of the cell as an issue.

The long-running dispute between HMRC and three waste companies centres on whether landfill fluff is taxable (picture: Shutterstock)

She said while previously the court described the fluff layer as being between 1 and 2.5 metres, “given the very substantial surface area covered by the geomembrane liner, that difference in depth could represent a considerable tonnage of black bag waste on which no tax was payable”.

Justice Rose allowed the appeal on the grounds that the waste was being discarded. She said while “one does not necessarily fall into the trap of the once waste always waste heresy”, it “cannot be that any material that is retained by the operator falls outside the tax”.


Lord Justice Christopher Nugee also allowed the appeal.

He said the various appeals turns on a single question: “When the LSOs [landfill site operators] disposed of the fluff… into the cell, did they intend to discard it?”

Justice Nugee said the case should have been more about what it is to ‘discard’ something.

“But in fact very little of the argument was directly concerned with this. Much of it was concerned with a rather different question which was whether the LSOs ‘used’ fluff or EVP, and whether that meant – not as a question of fact, but as a question of law to be derived from the previous authorities.”

He said in the absence of any statutory definition, or any reason to think it is being given a special meaning, Parliament is assumed to have intended it to bear its ordinary meaning.

Justice Nugee concluded by allowing the appeal, saying: “I agree that the appeals should be allowed and the decisions of the FTT restored.”

“Such use as the LSOs made of the material was insufficient to negate their otherwise obvious intention to discard it”

Lord Justice Guy Newey


Lord Justice Guy Newey agreed with the two judges, adding: “As Nugee LJ points out, the appeals turn on a single question, namely, whether the LSOs intended to ‘discard’ the fluff and EVP when they disposed of it in the cells. In my view, the FTT was right to conclude that they did.

“I agree with Lady Rose that such use as the LSOs made of the material was insufficient to negate their otherwise obvious intention to discard it.”


The ‘discard’ issue dates back to 2008, when HMRC said it would not appeal against a ruling in which a court found in favour of Waste Recycling Group (WRG), which was later acquired by FCC Environment.

WRG had successfully argued that a landfill site operator, who had used various inert materials for building roads and for ‘daily cover’ on a landfill site, did not have the intention of discarding it as it had retained and used the material for its own purposes.

HMRC then invited claims for repayment of landfill tax which fell within such examples. This is when various waste companies put forward claims relating to landfill fluff.

In mid-2009 HMRC decided that base and side fluff claims were in principle, well founded.

In December 2013, HMRC decided to stop repaying on base and side fluff, but said it would not seek to reclaim what it had already paid and issued a brief explaining this in 2014. Repayments are thought to be around £300 million (see letsrecycle.com story).

Related links

The decision can be read in full here.



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