Speaking as director of Waste Transition Ltd, Paul Levett argued that while he could see the case for an intermediate landfill tax rate for fines from materials recycling facilities (MRFs), a tiered system would lead to complications.
Under current proposals issued by Her Majesty’s Revenue & Customs, landfill operators must determine the presence of non-inert material in a waste load through LOI testing, which sees material heated in laboratory conditions to establish how much mass is lost.
Any load containing trommel fines must have an LOI of 10% or less in order to meet the lower tax bracket.
The measures were the focus of an HMRC consultation document which asked landfill and waste transfer operators for their feedback. The consultation period began on June 30 this year and closed this month (September 19).
The banding system, which was suggested by United Resource Operators Consortium (UROC) members, would see transfer station operators charged on a tiered basis, rather than either the lower or standard rate of tax – which stands at £2.50 and £80 respectively. The guidelines are as follows;
- 0 – 10% LOI = £2.50 – Qualifying Materials Order (Lower Rate Tax)
- 11 – 20% LOI = £16.00 – as 20% of the Standard Rate Tax
- 21 – 30% LOI = £24.00- as 30% of the Standard Rate Tax
- 31 – 40% LOI = £32.00 – as 40% of the Standard Rate Tax
- 51 – 60% LOI = £48.00 – as 60% of the Standard Rate Tax
- 61 – 100% LOI = £80.00 – as 100% of the Standard Rate Tax
UROC
UROC, which describes the system as an incentive to reduce the amount of volatile material in trommel fines, has itself condoned a transitional LOI threshold of 15% in order to give operators time to adjust to the new rules.
But UROC also warned it was unlikely that HMRC would adopt the recommendations, as the 10% LOI has already been announced as mandatory in the spring budget and is due to come into force in April 2015.
Commenting on the band system, Mr Levett said: “I can see the case for an intermediate rate for MRF fines which score greater than 10% on the LOI test but still have much less environmental impact than typical biodegradable waste.
“I think that too many bands would be complex, difficult to enforce, as LOI results are not instant, and arguably expensive to administer for a tax which will probably generate less and less revenue as the landfill market continues to rapidly decline. This will probably lead to landfill tax being replaced by bans on certain materials within a few years.”
Sam Corp, head of regulation at the Environmental Services Association (ESA), added that the organisation had its own ‘reservations’ about imposing a tax banding system on operators.
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Mr Corp said: “ESA has been working with HMRC and other stakeholders for some time to introduce an objective testing regime for waste fines and in general we support the proposals as set out in the consultation.
“ESA has some reservations about whether a tax banding system approach would work in practice. It could overcomplicate what needs to be kept a simple system for waste producers and landfill operators alike. ESA will however, continue to work with HMRC and other stakeholders to help fine tune the proposals before their proposed implementation in April 2015.”
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