19/03/24

Landfill Tax Investigations | HMRC

Landfill Tax Investigations | HMRC
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Landfill tax was introduced in 1996 with the intention of protecting the environment, reducing the use of landfill, encouraging recycling and work towards government green targets.

It is reported that the industry is worth £9 billion a year. HMRC's enforcement actions against businesses that operate landfill has increased, leading to a reported £1 billion in revenue from investigations into underpaid landfill tax over the past five years. In 2023, these efforts resulted in the recovery of over £280 million alone.

Landfill tax is an additional payment on top of a business’s normal landfill fees. However, accurately reporting taxes to HMRC often proves challenging due to the complexity of prevailing legislation and its practical application, resulting in confusion.

HMRC's strict interpretation when defining waste materials has led to individuals facing scrutiny and penalties for unintentional errors in their tax calculations, often arising from the complex nature of the regulations.

Such errors or inaccuracies may prompt HMRC to issue an unexpected Landfill Tax Assessment, potentially leading to severe consequences, especially if the assessment encompasses years of backdated taxes and penalties.

In this article Hamraj Kang outlines the main aspects of Landfill Tax and details how KANGS can assist in the event of a tax dispute with HMRC.

Landfill Tax

Nature of the tax.

Opposition to landfilling arises from various concerns including:

  • climate change – created by landfill gas emitted from biodegradable waste.
  • loss of resources - such as recyclable components.

Landfill Tax is a means of generating funds to address the environmental impacts of waste, discouraging disposal through landfill by increasing costs relative to sustainable alternatives, and promoting recycling initiatives.

Landfill Tax is levied according to the weight of the material disposed of on landfill sites licensed under the Environmental Permitting (England and Wales) Regulations 2016. Landfill Site Operators are responsible for accounting to HMRC for the quantity of material disposed of and the appropriate tax resulting from such activity.

In limited circumstances, where the Landfill Site Operator is not involved in the operation of the site, the Controller of the Landfill Site (the person who determines what is disposed of at the site) will be responsible to account for tax.

The tax is charged by weight at one of two rates, Standard rate, and Lower rate.
As from 1st April 2024 the rate will be:

  • Lower rate (less polluting materials): £3.30 per tonne.
  • Standard rate (all other waste): £103.70 per tonne.

These tax rates change in April each year. In addition to Landfill tax, VAT must be applied in the usual manner.

When is the tax payable?

Landfill tax must be paid:

  • on the date of disposal or
  • the date the invoice is issued as long as this is within fourteen days of the disposal.

Exceptions to liability for Landfill Tax

Materials exempt from Landfill Tax are:

  • those dredged from the bed of waterways and harbours,
  • naturally occurring waste material resulting from mining and quarrying operations,
  • pet cemeteries,
  • filling of quarries,
  • waste from visiting NATO forces.

Non-taxable Disposals

Non-taxable disposal material must be kept in a physically separate area to taxable disposals, and clearly identified. These are known as ‘information areas’ and more than one may be required to contain distinct types of non-taxable disposals.

Keeping records of Landfill activity

Detailed records must be maintained recording the liability in respect of each transaction to include:

  • quarterly summaries of tax due,
  • details of all information areas,
  • any credits for material removed from site,
  • all credit and debit notes,
  • invoices issued and received,
  • bad debt.

Compliance and Enforcement

HMRC conducts Compliance Checks where it suspects records are not being maintained or accounted for. Any amount not accounted for will be required to be paid, with a substantial penalty.

Where HMRC suspects fraud, it will investigate and, if necessary, issue criminal proceedings. A conviction may result in an unlimited fine, imprisonment for seven years or both. HMRC can also issue civil penalties against those who have not fully complied with their obligations.

How Can We Help?

It is essential that those operating landfill sites review their tax obligations and the distinct position of their operation. As mentioned above, the tax system regulating landfill sites is extremely complicated and difficult to navigate. HMRC interprets the compliance requirements extremely strictly.

The accomplished tax team at KANGS specialise in providing expert guidance and support to clients in challenging tax assessments, navigating any type of Tax Tribunal, and defending HMRC investigations, be it civil or criminal in nature. Should you require our assistance, please contact using the details below.

Tel:      0333 370 4333
Email: info@kangssolicitors.co.uk

We provide an initial no obligation consultation from our offices in London, Birmingham, and Manchester. Alternatively, we provide initial consultations by telephone or video.

Hamraj Kang

Hamraj Kang
Senior Partner

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Tim Thompson

Tim Thompson
Partner

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John Veale

John Veale
Partner

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