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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 investigation').


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 30(1)(b))
  • 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 activities.

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.

Further advice

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

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