The £125 million ‘gap’ covers the 2020/21 financial year and is the difference between tax actually collected and that which is “theoretically due” if compliance and mistakes did not happen. The £125 million represents around 17% of all landfill tax.
The report says the gap is closing, and is down from £275 million (29%) in 2018/19, due to new legislation bringing “unauthorised landfill sites in scope of the tax”.
The briefing document was prepared by researchers from the House of Commons Library and has been given to MPs ahead of the debate on landfill tax fraud on Thursday (12 January).
It seeks to bring together all available statistics and provide an overview of landfill tax in the UK.
Landfill tax
Landfill tax is charged by weight, with the lower rate that has been set to £3.15 per tonne as of 1 April 2022 charged for ‘inert’ waste which doesn’t decompose. For all other taxable material the landfill tax rate has been set at a standard rate of £98.60.
The briefing paper highlighted a report published by the National Audit Office (NAO) in April 2022, which said “landfill tax changes have, as intended, led to a reduction in landfill volumes but have also increased the financial incentives to commit waste crime”.
It added that barriers to operators entering the waste sector were low, and that sanctions and prosecutions for committing waste crime “may not be acting as effective deterrents.”
The issue has been previously discussed in parliament, with this week’s debate requested by David Davis MP on behalf of Kevan Jones MP on 1 November 2022.
‘Major issue’
Mr Davis said that landfill tax fraud is “a major issue for many constituencies”. He highlighted that landfill tax fraud has become “an area of exploitation” and “is particularly the case in the north-east”.
Mr Davis said that the problem’s maximum acceleration was “probably between 2005 and 2015 and is now at a steady state”.
“One pursuit was dropped because the Environment Agency thought it was only £20 million,” Mr Davis continued. “In another case, they thought they had only a 40% chance of success.” He highlighted the importance of this issue being addressed “properly” by a regulator.
Evasion of landfill tax or other charges for disposing of waste underlie many waste crimes, the report said, with misclassification of waste being the most common issue.
The briefing can be read in full here.
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