HM Revenue and Customs Brief 24/13
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Issued 16 August 2013
European Commission investigation into certain exemptions and
reliefs contained within the aggregates levy
Purpose of the Brief
The UK Government has received notification from the European
Commission that they have decided to open a formal investigation
relating to certain exemptions and reliefs within the aggregates levy.
Who needs to read this?
Businesses responsible for commercially exploiting exempt or
relieved aggregates contained within the levy in the UK which are now
the subject of the Commission's investigation (See below 'Scope of the
The British Aggregates Association (BAA) made a submission in
April 2002 to the European Commission arguing that the aggregates levy
contained State aid. The Commission decided not to raise any objections
against the levy at that stage. Following an appeal, the issue was
considered by the European Courts and on 7 March 2012 the European
General Court annulled the Commission's 2002 decision not to raise any
objections to the levy. The grounds for the annulment were not that the
Commission's conclusion was wrong, but rather that the Commission had
not undertaken the required degree of scrutiny in making a decision
whether the levy contained any State aid.
Following the annulment of its 2002 decision, the Commission
carried out a preliminary reassessment of the levy for State aid
purposes. On 31 July 2013 the Commission sent the UK its preliminary
conclusions and advised the UK that it was opening a formal
investigation into certain exemptions and reliefs. As part of this
investigation the Commission have asked the UK a number of questions.
The Commission also made it clear that some exemptions and reliefs do
not contain State aid and it is considering whether State aid is
contained within the exemptions and reliefs in the table below. It
considers that the aggregates levy in itself does not constitute an
unlawful State aid.
Scope of the investigation
|The Commission is reassessing the
exemptions and reliefs for the following materials:
|Ball clay and china clay
(Finance Act 2001 Sections 17(3)(e), 17(3)(f)(ii), 18(2)(b), 18(3) and
- Ball clay and china clay and spoil, waste and
by-products resulting from their extraction or separation from any
quantity of aggregate.
|Other industrial minerals
(Finance Act 2001 Sections 17(3)(f)(ii), 18(2)(b), 18(3) and 30(1)(b))
- Anhydrite; barytes feldspar; fireclay; fluorspar;
fuller's earth; gems and semi-precious stones; gypsum; any metal or the
ore of any metal; muscovite; perlite; potash; pumice; rock phosphates;
sodium chloride; talc and vermiculite that are used as aggregate; and
- Spoil from the separation of any of these industrial
minerals from other rock with which it was won.
|Coal, lignite, slate and shale
(Finance Act 2001 Sections 17(3)(f)(i) and 17(4)(a))
- Material that is wholly coal, lignite, slate or shale
and that is used as aggregate;
- Material that is mainly but not wholly coal,
lignite, slate or shale; and
- Spoil from the extraction of or separation from any
aggregate of coal, lignite, slate or shale.
(Finance Act 2001 Section 17(4)(f))
- Clay that is used as aggregate.
|Spoil from industrial processes
(Finance Act 2001 Section 17(4)(c)(i) and (ii)
- Material that is mainly but not wholly spoil, waste
or other by-products of any industrial combustion process or the
smelting or refining of metal.
At present the Commission has not made a decision on whether
the levy contains any State aid. During the course of its investigation
it will consider whether or not any of the exemptions and reliefs for
these materials gives rise to State aid. The Commission has raised no
objection to any other aggregates levy reliefs and exemptions and these
are not included within the scope of its investigation.
Businesses registered for the aggregates levy and
commercially exploiting aggregate in the UK have a continuing legal
obligation to pay the levy due on their activities. The opening of the
Commission investigation does not affect that position. HMRC has a
legal responsibility to collect the levy, including from those
unwilling to pay, and will act to recover any levy that is withheld.
Those who fail to comply with their legal obligations to declare and/or
pay the levy when it is due may incur penalties and interest.
What happens next?
The Commission has requested certain evidence from the
Government. The Government maintains that these exemptions and reliefs
do not constitute State aid and will provide further information to the
Commission to support this as part of the formal investigation process.
It is not yet known when the Commission will conclude its investigation.
Will the aggregates levy be suspended until the Commission's
formal investigation concludes?
No. The Commission has made it clear that the levy in its
entirety is not in question nor has any Court found that the levy gives
rise to State aid. The levy therefore is lawful and businesses
registered for the levy and commercially exploiting aggregate in the UK
have a continuing legal obligation to pay the levy due on their
Will the exemptions and reliefs that are the subject of the
Commission investigation be suspended?
No. The Commission has not asked the Government to suspend
them and the Government sees no reason to do so. The exemptions and
reliefs will therefore continue to apply.
Action required by businesses
The Government have been asked to answer a number of
questions by the Commission and must now respond. HM Treasury and HMRC
may ask some businesses and trade associations for evidence/information
to inform the Government's response to some of these questions.
If any reliefs or exemptions are found to be unlawful State
aid there is a possibility that the Commission could require the UK
Government to request businesses that have benefited from those
reliefs or exemptions to repay that aid. Whilst businesses that could
be affected should take note of this, no further action is required of
them at this stage. The Government remains confident that the evidence
supports their position that there is no aid.
The Commission will shortly publish its letter and
accompanying summary in the Official Journal of the European Union. All
interested parties will have the opportunity to make representations to
the Commission within one month of the date of that publication.
If you have any questions about this change please contact
the Environmental Taxes Unit of Expertise on Telephone 0191 225 9584.
About the Author
© Crown Copyright 2013.
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Article Published/Sorted/Amended on Scopulus 2013-08-19 09:07:19 in Tax Articles