Her Majesty’s Revenue & Customs have said that they have been overwhelmed by the amount of landfill operators who are attempting to claim repayment for tax paid on fluff material. This comes after HMRC’s attempt to suspend a judicial review of landfill tax repayments was thrown out by the court of appeal.
High Number Of Landfill Tax Claims
The calls for the review were being led by a coalition of major waste companies, with 90 different landfill operators claiming to be owed rebates for top, base and side fluff that was briefly discounted from the regime following an appeal by the Waste Recycling Group in 2008.
At the time the court of appeal decided that any material which is received at landfill which is then used on the site in any way cannot be classified as taxable as there wasn’t any alternative disposal option available to the processors. This includes fluff, soft waste for engineering which can be used to layer the base, sides and the cap of a landfill cell and help protect against leachate run-off.
The tax relief related to them was ended in 2012 when HMRC served two notices which said that ‘reverse or top fluff layer’ material could be taxed and that removing it did not mean that the material had been used. Then in 2014 the government kept its position by saying that all types of fluff ‘are and always have been taxable’ and that the 2008 ruling doesn’t set a precedent for landfill tax.
This caused the HMRC to receive the large number of claims for landfill companies who want to take the government decision to a first-tier tax tribunal. HMRC’s decision against the previous claims of Veolia has led the company to launch a judicial review, claiming a breach of its ‘legitimate expectation’ that it would be paid. Since their initial case a whole host of other waste firms have joined who claim to have unpaid repayment claims.
There have been fears that the high number of claims submitted would threaten to undermine the landfill tax system. After quashing the ruling, Lady Justice Arden concluded HMRC had failed to be clear about what precisely their case will be in response to Veolia’s claims or how wide its case will go into technical evidence in regards to fluff.
She said: “Needless to say, HMRC are now making some very serious allegations in the tax appeals brought by these respondents and other landfill site operators. I do not doubt that the position is complex. HMRC’s new case has the potential to lead to an increase in the areas of factual dispute.”
It is now expected that HMRC will appeal the decision, meaning that if the judicial review goes ahead the tax appeals could take years before they are processed. Speaking about the outcome, a spokesperson for HMRC said: “HMRC is currently considering how to respond to the judgment. We are determined that claims designed to ‘push the boundaries’ of environmental taxes to an unjustifiable extent will not succeed.”
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