The real cost of Landfill Tax

June 15, 2019 10:47 am Published by

Recent changes to Landfill Tax have increased its effectiveness as a way of encouraging less waste to be produced and the greater use of non-landfill waste management options (e.g. recycling).

However the changes have also increased the risks and costs faced by developers and contractors. It is now more important than ever that you have robust procedures in place for dealing with waste and can evidence adherence to recognized industry standards e.g. CL:AIRE’s Definition of Waste: Code of Practice

Landfill Tax – The Basics

Introduced in 1996, Landfill Tax encourages sustainable development and raises approximately £1 billion of revenue each year for the Exchequer.

The tax is payable when waste material is disposed of at a landfill site with the amount due determined by the classification and weight of the waste material being disposed.

A lower rate of £2.90/ton is payable on non-hazardous, low polluting qualifying materials including qualifying fines* deposited at authorised sites. All other disposals – including any disposal at an unauthorised site (see below) – are subject to a hefty standard rate of £91.35/ton.

In the case of the disposal of a mixed load, the standard rate of tax is payable unless the amount of non-qualifying material for the lower rate can be shown to be incidental.

Responsibility for calculating and paying the tax falls in the first instance to the operator of the disposal site, who cannot apply the lower rate of tax without having satisfied themselves through a series HMRC recommended checks and tests that the rate is appropriate.

* See sections 3,4 & 5 of Excise Notice LFT1: a general guide to Landfill Tax. Includes most construction waste.

Recent changes

After many years of little or no change, a big change to Landfill Tax occurred in 2018 when its scope was extended to cover disposals at unauthorised or ‘rogue’ landfill sites for the first time.

Furthermore, it was decided that “any person who knowingly causes or knowingly facilitates (such) a disposal could be jointly and severally liable for the tax.”

Impact of changes

The changes mean that, as a developer or contractor, you can now find yourself with a bill for Landfill Tax if you are connected to a disposal of waste at an unauthorised site and unable to prove you had taken all reasonable steps to prevent the disposal occurring.

With tax payable at the standard rate and HMRC able to charge an additional penalty of 100% of any tax due, this is clearly a significant increase in the risks and potential costs you face.

“A person can show that they did not knowingly cause or knowingly permit a disposal at an unauthorised site if they take all reasonable steps to ensure that a disposal at an unauthorised site does not happen. We intend to consider the criteria set out in the DEFRA Waste Duty of Care Code of Practice. We expect a person to:

  • make reasonable checks that the next waste holder is authorised to take the waste material
  • ask the next waste holder where they are going to take the material and obtain proof if possible
  • provide an accurate description of the material when it is transferred to another person
  • as a company director or partner, be directly engaged or responsible for decisions made regarding the disposals of material by that business
  • as a landowner, ensure that any lease or rental agreements state clearly what the premises or land may or may not be used for
  • as a corporate body, to include risk management procedures within your company’s risk assessment to take steps to prevent criminal facilitation of Landfill Tax evasion through your business

What needs to be done? / What next?

The changes mean it has never been so important to ensure that you have the right procedures and controls in place for identifying and dealing with waste.

A key element of this is of course ensuring you adhere to CL:AIRE’s DoW:COP and implement a Materials Management Plan which includes a Verification Plan and documents how any excavated material is to be dealt with. If you are not sure where to start, let us help. Just give us a bell on 01179 277 756 or email us at info@tp-regen.co.uk. We’d love to hear from you

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This post was written by Mike Nicholas

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