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HM Revenue and Customs Brief 02/14

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Issued 23 January 2014

Landfill tax: HM Revenue and Customs' approach to claims for repayment of tax

1. Purpose of this Brief

This brief is for landfill site operators and their advisers. It gives information about a change in HM Revenue & Customs' (HMRC) approach to claims for repayment of landfill tax following the judgment of the Court of Appeal in Commissioners for HMRC versus Waste Recycling Group (WRG) Limited [2008] EWCA Civ 849.

2. Background

On 22 July 2008, the Court of Appeal ruled in favour of WRG in their action relating to landfill tax. The Court found that where material received on a landfill site is used on the site for the daily coverage of sites required under environmental regulation and construction of on-site haul roads, it is not taxable as it was not, at the relevant time, being disposed with the intention of discarding it.

HMRC initially interpreted the judgment as meaning that any materials put to use on a landfill site were not taxable. It published Revenue and Customs Brief 58/08 in December 2008 inviting claims for repayment of tax in accordance with this view.

Revenue and Customs Briefs 15/12 and 18/12, published in May and June 2012 respectively, provided further clarification of the circumstances in which HMRC would consider claims for repayment of tax. In both briefs it was confirmed that material referred to by some as the ‘reverse or top fluff layer’ constituted careful placement of soft waste which is (and always has been) liable to landfill tax. This is because the waste material is disposed of with the intention of discarding it and the disposal does not constitute a use of that material.

HMRC's decision to treat this so-called 'reverse or top fluff' as material liable to landfill tax has been challenged by some landfill site operators who have appealed HMRC's decision to the First Tier Tax Tribunal. A hearing is now pending.

In preparation for such an appeal, HMRC has reviewed its approach to claims received relating to the WRG judgment. The decision to undertake a review was also influenced by the increasing number of claims from some landfill operators that have cited this judgment to challenge the boundaries of landfill tax legislation.

HMRC's review considered a wide range of information on claims that had been made following WRG and also reviewed HMRC's previous decisions to repay claims in relation to material referred to as 'base and side fluff'. As a result of the review, HMRC is today announcing changes in how such claims will be handled.

3. Outcome of HMRC's review of claims for repayment of tax following the WRG case

The review concluded the following:

All fluff claims

  • the principle of 'use' applies only to the specific circumstances in the WRG case
  • all types of fluff (whether 'side', 'base' or 'reverse/top') are, and always have been, taxable under primary legislation as it is waste permanently discarded to landfill
  • the WRG case does not provide a precedent that waste 'used' within a landfill site is not taxable
  • HMRC has found no evidence to suggest that fluff layers fulfil any engineering purpose or are a regulatory requirement
  • there is no difference between the various types of fluff in physical composition. They are all simply carefully placed and well-managed waste

Side and base fluff' claims only

  • HMRC will make no further payments of such claims
  • HMRC will not seek to reclaim any payments it has previously made

Reverse or top fluff' claims only

  • any claims for repayment of tax in respect of 'reverse or top fluff' will be resisted by HMRC
  • it cannot be inferred from payment of any 'base and side fluff' claims in the past that HMRC accept that material was being used, nor can any favourable inferences be drawn in the case of 'reverse or top fluff' from the fact that these payments were made

Gas generation

HMRC will continue to reject any claims based on the contention that waste disposed to landfill is being used to produce gas for electricity generation.

4. Further information

If you are in any doubt about the correct landfill tax treatment, please phone the Environmental Taxes Unit of Expertise on Telephone: 03000 557028.


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© Crown Copyright 2014.

A licence is needed to reproduce this article and has been republished for educational / informational purposes only. Article reproduced by permission of HM Revenue & Customs.



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Article Published/Sorted/Amended on Scopulus 2014-01-27 14:08:19 in Tax Articles

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