HMRC clarifies landfill tax rules

HMRC has been forced to issue a second clarification on landfill tax rates after protesters blocked Parliament Square over new guidance.

Skip-hire firms and waste-transfer companies launched protests in May over a new guidance note that they claimed had resulted in landfill tax bills soaring overnight by 2,500%

In a briefing published in May, HMRC stated that as it is impossible to identify exactly what is in the soil-like residue brought to landfill from waste transfer stations after recycling activities, such waste could not qualify as eligible for the lower tax rate of £2.50 per tonne under the Landfill Tax (Qualifying Material) Order 2011.

The brief stated that “in all such cases” the standard £64 per tonne rate of tax should be applied. Following complaints from the waste sector, HMRC issued a second briefing to counter what it described as “misinterpretation” by landfill operators that had resulted in the higher tax rate being applied more broadly.

The second note, published on 1 June, stated that if the transferring company could prove that the waste materials were listed in the 2011 Order and met the relevant conditions, it was eligible for the lower rate of tax.

An HMRC spokesperson rejected claims that the new clarification was a U-turn. “The rules have been in place since 2009 and have not changed,” she said.

However, the Federation of Small Businesses (FSB), disagreed. “It was made abundantly clear to us that skip operators were going to have to pay £64 per tonne to dispose of dusty construction waste. It seems they will now continue paying £2.50 per tonne. I suspect most people would call this a U-turn,” said Pierre Williams, FSB chief spokesperson.

While the sector digests the full implications of the two notes, the Environmental Services Association welcomed the HMRC’s bid to clarify the rules which had been interpreted differently by operators in the past. “It is right that the position is clarified to ensure a level playing field,” said the association’s director general Barry Dennis.