More landfill tax clarifications

HMRC has issued further advice on what waste materials qualify for the lower rate of landfill tax and pledged to update guidance on the rules

In a new interim advice note, the tax regulator confirms the lower £2.50-per-tonne rate applies to waste leftover from recycling activities – which is known as “trommel fines” – if the waste is made up of a mix of materials listed as qualifying for the lower rate under the Landfill Tax (Qualifying Material) Order 2011.

The note indicates that the onus is on landfill operators to be sure that the waste qualifies under the 2011 Order, but that waste transfer documents, completed by waste producers, “must clearly state from which qualifying materials…the waste was derived”. Waste transfer stations do not, however, need to list the materials that were filtered out.

HMRC acknowledges that it can be difficult for landfill operators to be sure that waste from trommel fines does qualify from standard paperwork, such as waste transfer notes. To help operators, HMRC states it is willing to look at additional paperwork, including information from waste producers, in examining whether materials do qualify for the lower rate of tax.

The new advice seems to react to a statement last month from the Environmental Services Association, the waste industry body, which warned that despite HMRC’s previous clarifications it remained unclear who was responsible for proving waste qualified for the lower-rate of tax and what evidence would be sufficient under the rules.

HMRC’s latest guidance note is the third issued in less than two months. In May skip-hire firms protested in Parliament Square over a briefing that stated the standard rate of tax (£64 per tonne) should be applied in general to waste from trommel fines, as operators could not be sure exactly was in the waste.

At the start of June, a second notice was issued to combat what the HMRC described as “misinterpretation” by landfill operators, who had seen the higher rate charged more broadly than had been anticipated. It stated that the lower rate should be paid where the materials can be shown to qualify under the 2011 order.

In this third notice, which HMRC states does not replace its previous advice, the regulator reconfirms that waste including an “incidental amount of non-qualifying material” should be awarded the lower rate of tax.

While the note does not provide any further guidance on what constitutes an “incidental amount”, it states that HMRC is working to develop more advice in this area and also on what “naturally occurring” means in terms of rocks and soils listed as qualifying under the 2011 Order.

In the note, HMRC pledges to work on how best to consolidate its guidance on landfill tax and to update the landfill tax notice.