The test, which determines whether a waste load should be subject to a standard or lower rate of landfill tax, is to be made compulsory for landfill operators in the rest of the UK from April 2015.
In January, the Scottish Government confirmed LOI testing would be introduced in line with the rest of the UK when landfill tax powers are devolved to Scotland in the spring (see letsrecycle.com story).
But, Revenue Scotland confirmed to letsrecycle.com that ministers now have no plans to introduce LOI testing during the first year of the new regime. The tests were not included in guidance for Scottish operators published by the organisation last week (February 16).
The revelation has prompted speculation over whether disposal businesses in Scotland would transport their waste to landfill sites south of the border or vice versa.
Under the HMRC proposals, a waste sample would be heated in laboratory conditions to calculate how much non-inert material is present. Customers must ensure the load has an LOI of 10% or less in order to be considered eligible for the lower rate of tax – which stands at £2.50 per tonne.
In the rest of the UK Her Majesty’s Revenue & Customs (HMRC) has accepted a 12-month transitional period in which the fines will only have to produce an LOI of 15% in order to meet the lower tax threshold (see letsrecycle.com story).
Clarify
A spokesperson for Revenue Scotland said: “We understand that Ministers have no plans to introduce mandatory Loss on Ignition (LOI) testing for the first year of operation of the Scottish Landfill Tax (SLfT).
“Revenue Scotland is currently working to clarify its guidance – before 1 April – on the application of section 14 of the Landfill Tax (Scotland) Act 2014. This provides for small amounts of material to be disregarded when a load of waste otherwise qualifies for the lower rate of SLfT. This guidance may include reference to evidence provided by LOI testing.”
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Stephen Freeland of the Scottish Environmental Services Association (SESA), who has worked with stakeholders in Scotland to flesh out Scottish landfill tax regulations, called the decision ‘disappointing’.
He said: “Certainty, and sufficient notice to plan and prepare are vital in advance of any regulatory change.
“With the Scottish landfill tax guidance only very recently published, and with a number of key sections yet to be clarified, the industry has been left guessing on many of the finer and more practical aspects of the new landfill tax regime.
“The decision not to proceed with Loss on Ignition (LOI) from the outset of the Scottish landfill tax regime is disappointing, particularly as it seems increasingly likely that operators within the rest of the UK will benefit from such from 1 April.”
Transitional
Julian Bowden-Williams partner at financial specialist Enrst & Young, noted last week that there is likely to be a “six month transitional period for HMRC rulings” once the Scottish landfill tax comes into effect.
Speaking to letsrecycle.com, Mr Bowden-Williams added that he had encountered ‘a level of uncertainty’ in Scotland over how the LOI system would work in practice.
However, he added that the Qualifying Materials Order would still apply to waste operators in the meantime, which already dictates that waste material can only qualify for the lower rate of tax if it meets certain criteria.
The transfer of landfill tax in April will see the newly-created Revenue Scotland manage and collect an estimated £600 million per year – and is one of Scotland’s first independent taxation powers in more than 300 years (see letsrecycle.com story).
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