We now have guidance on the subject matter in the recent Court of Appeal decision in Waste Recycling Group Ltd v HM Revenue and Customs Commissioner (HMRC) (Judgment date: 22 July 2008)
Introduction
The case debates the question of whether there was a liability to Landfill tax, where material has been used for “non waste” purposes (i.e. daily cover, engineering material or for road make up), to landfill tax. In so doing, it examines the proper interpretation and application of the provisions of Part III of the Finance Act 1996 (\’the Act\’) and, in particular, sections 40(2)(a) and 64 of the Act.
The facts
Waste Recycling Group Limited (WRG), was in the business of waste management. WRG owned and operated approximately 60 landfill sites across the UK, most accepting both inert and active waste. WRG was liable to pay (and paid) landfill tax charged in respect of taxable disposals at its landfill sites.
A condition of WRG’s licence was that it must keep sufficient stocks of inert material (or suitable substitutes) for use as daily cover to lay over the waste material that has been deposited during the course of a day\’s operation. Further, inert material is also used for site engineering purposes, particularly the construction of roads within the sites.
WRG sought, a refund of landfill tax paid in respect of inert materials it had used in the period 1 October 1996 to 30 September 2002 either to provide daily cover or in the construction of the roads on its sites. It argued that such use of inert material could not give rise to a taxable disposal for the purposes of landfill tax and sought a refund of the overpaid tax (in the sum of £2.1m) because the relevant material had not been disposed of \”as waste\”
Summary
The Court of Appeal held that inert materials put to use on landfill sites, for example as daily cover or in the construction of on site roads, should not be subject to landfill tax as in such circumstances there is no disposal with the intention of discarding the material.
HMRC state that they accept the Court’s decision and confirm that they do not intend to appeal the case further to the House of Lords.
Accordingly, HMRC explain that they no longer consider materials put to use on a landfill site to be taxable. HMRC set out a number of non taxable uses, which include:
• cell engineering;
• daily cover;
• construction of both temporary and permanent site haul roads;
• construction of temporary and permanent hardstanding;
• construction of noise and visual screening bunds and mounds;
• backfilling of space between gas leachate pipes and boreholes.
What can Albion do for you?
• Landfill tax reclaim
• Training and mentoring to ensure you are not paying too much
• Review/redraft your terms and conditions to ensure you minimise your LFT liability.