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Blog: Consultation on landfill tax fines may cause issues

Date: 11/10/2013 | Author: Paul Levett

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Paul Levett, who is a non-executive board member of several companies in the recycling industry, looks at why a current consultation on landfill tax may cause the industry problems

HMRC has recently published a consultation on draft further guidance on lower ratings and interested parties have until 20 October 2013 to respond.

The guidance as drafted has the potential to constrain landfill diversion, encourage fly-tipping and to reduce the previously high levels of recycling of construction and demolition waste. 

Essentially, the proposed rules will apply full landfill tax to inert materials "fines" generated from recycling plants. Such recycling plants are often low margin activities and the adverse changes proposed by HMRC will cause some recyclers to close and others to reduce the volumes recycled. In environmental terms, it should be noted that inert materials do not contribute to greenhouse gases .

Recyclers have to transport materials, sort them and extract resources (eg metals, card, large plastics etc) and then transport outputs. It's not a low cost operation. To the extent that certain flows or plants are no longer economic, the gross flow will go to landfill, losing the opportunity to extract the valuable resources which are current put back to use in the UK economy.

The changes should also be seen in the context of the withdrawal of Site Waste Management Plans for construction sites. The combined effect will be a reduction in the recycling rate. 

The current regulations were supposed to allow inert materials to be taxed at the lower rate of £2.50 per tonne, subject to the inclusion of other materials being small or incidental. Unfortunately the terms ‘small’ and ‘incidental’ have never been defined. 

Surely a sensible way forward would be to recognise the environmental benefits of recycling vs landfill and to either define ‘small’ and ‘incidental’ - say 5 per cent or to apply a weighted rate of £8.50 per tonne for largely inert fines containing non listed materials up to say 10 per cent?

Everybody would win - the environment, industry and HMRC. A higher rate could reverse the positive recycling trend that so many have worked so hard to achieve.

Is the HMRC proposal the result of joined up government or simply a silo approach to a perceived administrative problem?

View the consultation at http://www.hmrc.gov.uk/landfill-tax/lower-rating.pdf

 


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