As a ground engineering specialist, Landfill Tax may not feature highly on your list of things to worry about. However, if you are not aware of recent changes to the tax, you need to be. Changes in the Finance Act has enabled HMRC to recover Landfill Tax – currently £88.95/t – on what they view as “illegally deposited” waste.
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These changes came about following a significant number of abuses of the system whereby materials have been reused without the appropriate permit or where exemptions/permits, such as the Contaminated Land: Applications in Real Environments (CL:AIRE) Definition of Waste Code of Practice (Dowcop) a have not been adhered to.
You might be surprised at what illegally deposited waste covers. Fundamentally part III of the Finance Act 1996, has been amended to cover any site – not just landfills – that is determined an illegal deposit. This includes fly tipping, badly managed or illegal landfills and also development or construction sites that may be operating without the appropriate environmental permit, appropriate Environment Agency Exemption or, correctly managed and validated Dowcop Materials Management Plan (MMP).
As well as recovering the landfill tax at the full rate of £88.95/t, HMRC can also charge an additional penalty of up to 100% of the tax due and has the right to prosecute those who do not pay.
It is not just us earthworks and remediation contractors that are at risk of the tax. Imagine your pile arisings on a contract total around 350t and the project imported 5000t of recycled aggregate for your working platform if there isn’t a U1 Exemption or other re-use permission in place and it turns out that the aggregate imported was purchased under the guise of being Waste and Resources Action Programme (Wrap) compliant but in reality was just crushed demolition arisings! Unfortunately, as you didn’t check the testing was in place for the Wrap aggregate and the supplier has folded following an HMRC investigation, the client, the main contractor and the engineer are now potentially facing a total Landfill Tax bill of more than £475,000 and a possible fine of the same again split between you. Without the fine that’s probably more than twice the value of the job.
The easiest way to avoid the tax is to engage with specialist contractors or advisors who understand the implications. Ensuring the proper use of the CL:AIRE Dowcop, the U1 exemption (or similar) and following the Wrap Protocols fully will ensure you are compliant.
Anyone working in the ground engineering industry needs to be confident that any waste materials intended for use, such as pile arisings, leader trench arisings or arisings from general excavations, are being managed appropriately on site with the necessary permit, exemption and/or Dowcop declaration/MMP.
This change in landfill Tax marks a shift in regulatory position to a regulator who most certainly has teeth - make sure you don’t get bitten!
- Steve Edgar is a director at Vertase FLI and FLI QDS