Councils from all over the country have been asked to disclose the details of their commercial waste collection arrangements, as an on-going dispute over whether they should be exempt from paying VAT. The issue has grown out of a freedom of information request by a recycling company who believe that they are disadvantaged as a result.
Are Councils Commercial Waste Collection Rules Fair?
The company argues that under the current rules which were established by Revenue & Customs (HMRC) back in 2011, put private sector companies at a competitive disadvantage to the councils, meaning they must charge lower prices in order to attract and retain their customers.
But in response the Local Authority Recycling Advisory Committee (LARAC) attempted to justify the exemption arguing that household collections remain the top priority for councils, claiming that it is difficult for them to compete with the commercial services available to the private sector.
The FOI request asks councils how many registered businesses and SMEs are within their local authority area, and if they provide commercial waste or recycling collections to them. The result was mixed, with a variety of responses coming back; with many refusing claiming that the information is ‘commercially sensitive’.
The Environmental Services Association (ESA) is also gathering evidence for the tax authorities which could show whether or not VAT exemptions cause a distortion in the market.
Jacob Hayler, ESA executive director, said: “HMRC has asked ESA whether we can help gather evidence which may demonstrate that a distortion is occurring in the market. Towards this end, we are investigating how this might best be approached.
“One option we are considering is whether external economic consultants might be able to help us provide the evidence and analysis we need to put this issue to bed once and for all.”
The end result could have a big impact on commercial waste collection businesses on both sides of the argument, as the amount of tax in question can make a difference. With the commercial waste sector just finding its feet since the economic downturn, decisions such as this will be watched closely by everyone involved.
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