HM Revenue and Customs Brief 41/14 - Aggregates Levy credits in Northern Ireland
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of this brief
This brief gives details about the introduction of an 80%
aggregates levy credit for aggregate commercially exploited in Northern
following its importation from another European Union (EU) Member
State. The levy paid on this aggregate must have been accounted for at
the full rate between 1 April 2004 and 30 November 2010 (‘the relevant
period’) and the originating quarry in the other Member State must have
met required environmental standards.
2. Who needs to read
Anyone who accounted for the aggregates levy at the full rate
on aggregate that was commercially exploited in NI during the relevant
period following importation from another EU Member State.
Introduced on 1 April 2004, the Aggregates Levy Credit Scheme (ALCS)
provided an 80% levy credit to operators in NI who commercially
exploited aggregate originating there, provided they entered into an
agreement with the Department of Environment (DoE) in NI to improve
environmental standards at their site(s). The scheme was intended to
help aggregates producers in NI
cope with the very different market conditions (compared with those in
Great Britain) as a result of being the only part of the UK to share a
land boundary with another EU Member State.
In response to action taken by the British Aggregates
Association, in 2010 the European General Court annulled the European
Commission’s 2004 State aid approval for the ALCS. The
scheme was therefore suspended from 1 December 2010 while the
Commission undertook an investigation. This was outlined in Revenue and
Customs Brief 42/10.
investigation into the ALCS
The Commission has completed its investigation and published
its decision on 7 November 2014. The Commission is broadly content that
the scheme complied with the prevailing rules but expressed concern
that the tax benefit arising from the ALCS did
not apply to aggregate commercially exploited in NI that originated in
another EU Member State. The decision requires the UK to correct this
5. UK’s response to the
Commission’s decision on the ALCS
The UK will introduce legislation to provide for credits of
aggregates levy for anyone that accounted for the levy at the full rate
on aggregate commercially exploited in NI
between 1 April 2004 and 30 November 2010 following importation of that
aggregate from another EU Member State. The claimant must satisfy the DoE that it
obtained the aggregate from a quarry that met specified environmental
standards. If they do so, the claimant will be entitled to a credit of
80% of the tax paid (plus interest), bringing their tax liability into
line with businesses in NI
that participated in the ALCS.
6. When can I claim the
aggregates levy credit?
The primary legislation will be included in Finance Bill 2015,
with the more detailed provisions set out in secondary legislation. You
will be able to submit claims after this legislation comes into force,
which we expect to be from 1 April 2015. Claims must be submitted to HM
Revenue and Customs (HMRC)
within 4 years of the legislation coming into force. Claimants,
however, need to obtain a certificate from DoE before
they can submit a claim and we would advise you to apply for this
certificate as soon as possible after the legislation comes into force
(see paragraph 8 below for the process).
7. Can I claim the
aggregates levy credit?
You can claim a credit if you either:
- accounted for the levy at the full rate on aggregate that
was commercially exploited in NI
between 1 April 2004 and 30 November 2010 following importation of the
aggregate from another EU Member State
- are the person who was registered for, and paid, levy on
the aggregate which is the subject of the claim
8. How do I claim the
aggregates levy credit?
You must demonstrate that the quarry in the other Member State
from which you obtained your aggregate met environmental standards that
judge to be comparable with the requirements met by ALCS
members between 2004 and 2010. To do so, you will need to complete a
form providing the DoE
with details about the quarry and the aggregate you obtained. If,
following investigation, the DoE
deem the quarry’s environmental performance to have been satisfactory
at the time the aggregate was purchased, it will issue a certificate to
support your claim to HMRC
for a credit of tax.
More details about this process, including an application
form, will be published on the DoE website
after the legislation comes into force.
9. What happens after I
receive a certificate?
After you receive a certificate from the DoE (see
section 8 above) you should apply to HMRC for a
credit of any levy you paid at the full rate during the relevant period
covering aggregate from the quarry covered by the certificate. You must
apply to HMRC
no later than four years from the date the legislation comes into
force, sending a letter setting out the details of your claim and a
copy of the DoE
certificate, along with evidence to show that aggregates levy was paid
at the full rate on aggregate commercially exploited in NI during the relevant
period. The evidence that HMRC
will require will be specified in legislation but is likely to include
- a copy of the original return on which the levy was
- a supporting ledger breaking down the entries in any of the
- identification of the entry for which a credit is sought
- commercial evidence of purchase and subsequent importation
of the relevant aggregate
- evidence of payment of the levy shown on the return
If any of the above evidence is missing, HMRC will
consider alternative forms of evidence to support a claim.
10. Will aggregates
imported into NI
from other parts of the UK be eligible for these levy credits?
No. As set out above, the ALCS
aimed to help those operating in the specific circumstances that
applied in the NI
aggregates market. If an NI
operator bought aggregate from a quarry elsewhere in the UK it would
not have been the NI
operator that would have had to pay the levy at the full rate but the
quarry ‘exporting’ the material to NI.
Offering a credit to the operator in Great Britain would not help the NI quarrying sector but
the operator in Great Britain. This was not the intention of the
original scheme and therefore not the intention of the new credit.
Relief, however, will be claimable by registered quarry
operators in the rest of the UK on aggregate obtained from another
Member State which then became taxable as the result of becoming
subject to an agreement to supply to a person in NI.
11. Why is the
Commission still investigating the aggregates levy?
sought a judicial review of the levy in 2002 and also raised a
complaint with the Commission arguing that some of the levy exemptions
give an unfair advantage to certain quarry owners and therefore
constituted unlawful State aid. Following a number of Court cases, the
Commission are now undertaking an investigation to determine whether
some of the exemptions constitute unlawful aid (this is separate to the
investigation). The Government suspended the exemptions under
investigation from 1 April 2014 pending the outcome.
12. Can I claim a levy
credit on materials from NI
which were exempt prior to 1 April 2014 but brought into tax as a
result of the UK-wide suspension from that date of certain exemptions?
No, since no tax will have been paid on these materials in
relation to the relevant period.
13. What if the
Commission investigation into the exemptions concludes that tax should
have been payable on them - what impact will that have on the credits
The Government is not expecting the Commission’s decision on
the exemptions until 2015 and cannot anticipate that decision at this
stage. It will consider whether there are any implications for the
detailed arrangements for credits on aggregate commercially exploited
in NI between
2004 and 2010 once it has considered the Commission’s decision on the
14. Will the Government
reintroduce the ALCS
now that the Commission investigation into the scheme has concluded?
The Government will come to a final view on whether this is
possible once the outcome of the further Commission investigation into
the UK-wide exemptions from the levy is known. If it were to seek to
reintroduce the ALCS,
the scheme would need to be compliant with the 2014 Environmental State
Aid Guidelines and need to undergo a formal notification process.
15. Further information
The primary legislation necessary for the credits will be
published in draft on 10 December 2014, along with an explanatory note
and a tax information and impact assessment. Secondary legislation will
also be published in draft at a later date.
A further Revenue and Customs Brief will also be issued when
the legislation comes into force giving more details of how to claim
If you have any further questions about this announcement
please contact Catherine Osborne on Telephone: 03000 536971 or email:
About the Author
© Crown Copyright 2014.
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Article Published/Sorted/Amended on Scopulus 2014-11-25 09:00:13 in Tax Articles