Confusion still surrounds the so-called skip tax after the HMRC issued a clarification to recent changes which would have seen the tax cost of disposing of certain materials increase by a staggering 2,460% overnight.
However in the clarification last week the HMRC said the new charges would not apply to so-called inert material. However a landfill tax expert from consultants Ernst & Young, told letsrecycle.com said that last week’s HMRC update on the landfill tax still did not make it clear however what is “inert” material and therefore is attract the lower tax rate.
However, landfill operators, through their trade body, the Environmental Services Association, have welcomed the HMRC “clarification” of rules covering the landfill tax relating to materials from waste transfer stations and skip hire businesses.
ESA director general Barry Dennis told the website: “We welcome HMRC’s further clarification of the rules which apply to landfill tax. In particular we welcome HMRC’s confirmation that residual materials from waste transfer stations will be liable to the lower rate of tax where they can be shown to be genuinely inert material, while materials which cannot be shown to be inert will be subject to the standard rate.”
Commenting immediately following the clarification in the Bulletin Brief 18/12 issued by HMRC, Julian Bowden-Williams, tax partner with Ernst & Young told letsrecycle.com he was pleased that HMRC appear to have taken on board the strength of feeling that has been generated over the past two weeks throughout the waste industry as a result of the previous announcement. This would have seen materials from trommels, previously charged at the lower landfill tax rate of £2.50 hiked to the full rate of £64-a-tonne to landfill which is paid for “active” material.
Mr Bowden-Williams said: “Whilst HMRC have suggested that the waste industry’s belief that an increase from £2.50 per tonne to £64 per tonne due on certain waste streams was down to a misunderstanding, it would be surprising if the whole industry really misinterpreted the previous HMRC announcement.
“The fact that HMRC have now issued a clarification (and said that there has been in their view no change in the rules for the tax treatment of such materials since 2009) is welcome, in that there is clarity on what has – or rather what has not– changed.”
But minister in charge of the landfill tax Lord Taylor said: “Where inert material is involved we accept the case for a reduced charge is justified. That is the department’s opinion on the matter,” he said.
But industry insiders warned they now faced a considerable battle over clarification of what is considered “inert” material. A senior figure said the definition used by HMRC and Defra to classify “inert” was at odds with what many in the industry felt was fair, reported Construction News.
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