Further advice has been provided by HMRC to clarify when material qualifies for the lower rate of Landfill Tax.
Landfill tax is currently £64 a tonne, but some inert materials are able to qualify for a rate of £2.50. However, HMRC recently revealed that materials that were previously thought to qualify for the lower rate, such as trommel fines and some construction waste materials, would actually qualify for the higher rate.
Following consultation with waste industry representatives and other stakeholders, HMRC has now issued further guidance on this matter.
The interim advice document notes that the Landfill Tax Notice (LTF1) states that waste management companies must keep sufficient evidence to substantiate applying the lower rate of tax to any particular disposal of waste.
It states that: “The only determining factor as to whether waste is lower rated is whether it is listed in the Landfill Tax (Qualifying Material) Order 2011. Whether or not waste is to be considered to be inert for environmental protection purposes is not relevant to matters of tax liability.
“Equally, the fact that waste is listed in the Landfill Tax (Qualifying Material) Order 2011 does not mean that the waste is inert for environmental protection purposes.”
When it comes to trommel fines, only materials or a mix of those materials that are included within the Landfill Tax Order 2011 will qualify for the lower rate.
The same applies to consignments of construction soils and soils from demolition of buildings and structures.
However, as is explained in LFT1, a consignment of qualifying material can contain an incidental amount of non-qualifying material and still qualify for the lower rate.
The waste transfer documentation must accurately record the composition of the waste consignment, setting out specifically which qualifying materials or mix of qualifying materials are contained in the load or consignment.
For loads or consignments of trommel fines, the documentation must clearly state from which qualifying materials, or mix of qualifying materials, the fines that go into the trommel were derived (other wastes that were filtered out before the waste goes into the trommel should be ignored).
An example it gives of what the document should say is: “Trommel fines derived from naturally occurring subsoil, construction stone and concrete materials.”
HMRC is now working on providing a definition of “naturally occurring”, more objective evidential requirements and guidance on the conditions that must be met where lower rated waste qualifies for exemption from Landfill Tax.
The Growth Opportunities in Recycling and Waste conference on 13 July at One Drummond Gate in London, will have a special session on clarifying the HMRC Landfill Tax rules, as well as sampling material to ensure it meets the lower tax rate. Find out more here