Two waste management companies, Devon Waste Management Ltd and Biffa Waste Services Ltd, appealed against decisions of the First-tier Tribunal, upholding HMRC's assessments of certain waste material to landfill tax.
The appellants both operated landfill sites. Due to a decision in previous case law, legislative changes were made to the landfill tax regime with effect from September 2009. Those changes meant that certain activities that were not caught previously, were treated as taxable disposals under the Finance Act 1996.
The issue on the first appeal was whether certain "black bag" waste material from households, shops and offices were subject to landfill tax. Instead of being cast into landfill cells and crushed together with other waste, some "black bag" waste, known as "fluff", was selected for use as a buffer layer to protect against leakage of polluting liquids and gases. Placed in that way, the fluff performed a function in the cell in addition to being waste disposed of.
In the second appeal, the material in question was known as EVP and was a layer of non-compacted waste laid on top of landfill waste, essentially the same as fluff. The appellants argued that the previous case law was authority for the proposition that, making use of materials for the site operator's purposes connected with regulatory compliance, when they were deposited in the cell, was "use" inconsistent with an intention to discard, even though the materials had been disposed of at the site as waste, and such waste was not a taxable disposal under the 1996 Act. The tribunal held that the use of the fluff to protect the cell lining was not enough to negate an intention to discard it, and it therefore fell within the 1996 Act as being made by way of landfill.
At this appeal it was considered that HMRC had argued that previous case law was decided on the basis of the 1996 Act, which provided that material deposited on the land with a view to it being covered with earth at a later time was treated as being disposed of at the time of deposit, not the time when it was covered. That provision was therefore concerned with the time at which a disposal by way of landfill took place and had nothing to do with the separate question by which the previous case law was concerned, namely that of whether the material was disposed of "as waste". The only relevant question was whether, at the time of disposing of the material by landfill, the operator intended to discard it. Previous case law decided that if a site operator disposed of material at a landfill site, but in doing so intended to and did make use of its properties for his own purposes, including regulatory compliance, that use meant that the operator did not make the disposal with the intention of discarding the material.
"The clear conclusion is that the taxpayer companies, when disposing of fluff at their landfill sites, intended to and did make use of the properties of the fluff for their own purposes, namely providing a layer of protection for the geomembrane and drainage layer in the cell and the cap of the cell, thereby complying with the regulatory requirements for use of the landfill cell. The careful inspection of the fluff layer (to ensure that no sharp or large objects were contained in the bags) and the different compaction used on the fluff emphasise that the fluff is being used by the taxpayer companies in a particular way, in contradistinction to other black bags that are disposed of as waste".
The appeal was allowed.
