North east waste business, The Durham Company Ltd, trading as Max Recycle has brought the case against HMRC – having originally sought proceedings in late 2014 (see letsrecycle.com story).
The case centres on HMRC’s decision in 2011 to allow VAT exemptions for the provision of commercial waste services by local authorities, on the basis that they have a duty to arrange for collections under the Environmental Protection Act 1990.
A substantive hearing for the Upper Tribunal Tax case was heard in the High Court on Monday (19 July) – with both sides having made representations to the Judge.
Max Recycling has argued that the exemption is anti-competitive, and gives councils a commercial advantage over private waste businesses offering the same type of service.
The company has claimed that the continued allowance of a VAT exemption for councils creates an ‘uneven playing field’ against the private sector.
Exemption
HMRC has sought a preliminary ruling on whether there is a ‘special legal regime’ for the exemption – and to determine whether there is a ‘significant distortion of competition’ by means of the review.
Commenting following the hearing, a spokesperson for HMRC, said: “The case was heard in the Upper Tribunal on the 18/19 July 2016 and we await the decision.”
Rulings in Upper Tax Tribunal cases can take up to three months to be delivered, although a judgment could come sooner depending on the schedule of other tax tribunal cases to be heard this summer.
The Local Government Association (LGA) attended the case as an interested party. The organisation last week claimed that a ruling in favour of the private sector could cost local authorities ‘millions of pounds’ in lost revenue (see letsrecycle.com story).
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