8 September 2017

How much waste is avoiding the correct landfill tax?

In the wake of publication of waste management figures for 2016 by the Environment Agency, Phil Conran of 360 Environmental gives his thoughts on waste data.

Landfill data comes from two sources. HMRC produces six monthly reports of tonnage reported across the UK, broken down by the three rates of standard, inert and exempt. The EA produces annual reports giving a comprehensive breakdown of waste reported by permitted facilities under their quarterly return obligations. This data is vital for the waste sector to plan for future waste treatment capacity but in recent years, there have been increasing question marks over the differences between these two sources.

The EA Waste Data Interrogator (WDI) for 2016 has just been published giving a breakdown of waste removed and received in England in calendar year 2016 under the EA’s jurisdiction. The total waste landfilled is shown as 44.7m tonnes compared to HMRC’s total recorded figure for the same period of 28.9m tonnes. Of the 44.7m tonnes, 39.2m tonnes is accounted for by just 5 EWC codes:

In the same period, HMRC reported the following:

Explicit rules are applied to the classification of the tax rate for waste. The exempt rate is only applied to very specific wastes and the lower rate should only be applied to wastes that meet the ‘qualifying material’ criteria laid down by regulation. Top soil, for instance, is classed as standard rate whilst subsoil can be classed as inert. Waste claimed to be lower rate must also satisfy the ‘loss of ignition’ test, so the bar is set high to meet the lower rate requirements. But with the standard rate set at £86.10/tonne and the lower rate at £2.70/tonne, there is clearly a strong incentive to apply the lower rate.

The graph illustrates how the two tonnages have diverged since 2013, interestingly, the year after the trommel fines ‘clarification’ by HMRC.


A further categorisation relates to the hazardous/non-hazardous categorisation. Both hazardous and household/industrial/commercial waste should be at the standard rate raising further questions as to how only 10.273m tonnes of waste was taxed at that higher rate.

This data would therefore seem to raise two questions:

1.Why is HMRC now capturing so much less tonnage that the EA quarterly returns?

2.How much waste is being mis-classified or simply not reported?

HMRC and the environmental Agencies operate independently. HMRC only receive tax from landfill operators who have registered their sites with them but verification of whether sites should be paying landfill tax is not part of the Agencies’ remits. There is understood to be increasing cooperation between the various Agencies and HMRC, but to what extent is unknown. For every million tonnes of waste not captured by HMRC or mis-classified, the exchequer is potentially losing £86.1m tonnes of revenue in 2017 and with the public purse under increasing pressure, it would seem like good value for some detailed investigation to be carried out to reconcile these figures and if correct, to explain the differences.

Email to a friend


To post your comment, please login or signup.

Login Sign up