The Government plans to overhaul the landfill tax system and proposes to charge a higher rate of tax for some materials, which are currently considered inert and charged a lower rate of tax.
A Treasury consultation document entitled, 'Modernising landfill tax legislation', claims an overhaul is necessary to reflect changes in environmental protection regulation since the tax was introduced in 1996. In particular, the document outlined plans to redefine a number of wastes currently classed as inert waste under the levy, which only incur a charge of £2.50 per tonne when landfilled. It is intended that they will be subject to the full level of tax, which is currently £40 per tonne.
To achieve this, the Treasury said it planned to "follow the various tests in European legislation" to determine whether a waste was inert.
Wastes that are no longer expected to qualify for the lower rate include coal fly ash (pulverised fuel ash); bottom ash and slag and boiler dust; furnace slags including slag from waste incineration; used foundry sand; gypsum/calcium sulphate; brine waste; red mud; and low activity inorganic compounds. However, the Treasury suggests that implementation may be delayed for a set period.
Nonetheless, the document confirms that more immediate changes to how landfill tax is applied to certain activities on a landfill site will take effect from 1 September 2009, following the ruling in Commissioners for Her Majesty's Revenue and Customs v Waste Recycling Group (WRG) Ltd [2008] EWCA Civ 849.
The Court of Appeal ruled in favour of WRG in relation to landfill tax and agreed with WRG's argument that it had paid for inert materials which were accepted onto its site and used for daily cover and site engineering purposes. The inert material had not been disposed off as waste and was not a taxable disposal.
However, fears that the decision could lead to a flood of claims for refunds of landfill tax by waste management companies appear to have prompted the Treasury to close this avenue on 1 September.
The consultation said, "Following the WRG case, HMRC have accepted that, across the UK, a significant amount of waste is outside the scope of landfill tax. At the same time, the Government believes that the policy rationale underlying the tax points to an imperative to tax much of this waste. Legislation in 2009 will, therefore, bring certain wastes back into the scope of the tax."
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