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HM Revenue and Customs Brief 42/10


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Aggregates Levy: suspension of Northern Ireland Aggregates Levy Credit Scheme

Issued 26 October 2010

This brief announces the suspension of the Northern Ireland Aggregates Levy Credit Scheme with effect from 1 December 2010.

Operators in Northern Ireland who have been eligible for relief under this scheme will have to pay the full rate of Aggregate Levy of £2.00 per tonne on the supplies they make from this date.

Why is the scheme being suspended?

This action results from a European General Court ruling, in response to action taken by the British Aggregates Association, which annulled the European Commissionís State aid approval of 2004 for the Aggregates Levy Credit Scheme.

Continuing to grant relief under the scheme is therefore unlawful as there has been no Commission decision to approve the aid; continuing to grant aid increases the risk of the Commission taking recovery proceedings against those benefiting from the scheme.

The scheme is therefore being suspended from 1 December 2010. This date was chosen as it achieves early compliance with the Courtís judgment while giving the industry fair and reasonable notice.

Will the scheme be reinstated?

The government continues to support the scheme and if the Commission were to come to a fresh decision that the aid was approvable it would seek to reintroduce the scheme, and to extend it beyond April 2011 (when the original state aid approval was due to expire).

How do I fill in the boxes on my Aggregates Levy return?

If you are submitting quarterly returns and you are in possession of an Aggregates Levy Credit Agreement your return may include both supplies made before 1 December 2010 qualifying for 80 per cent relief with an effective rate of £0.40 per tonne and supplies made on or after 1 December 2010 at the full rate of £2.00 per tonne.

In the example below an operator supplies:

  • 500 tonnes of taxable aggregate before 1 December, qualifying for 80 per cent relief
  • 500 tonnes of taxable aggregate on or after 1 December at the full rate
  • 300 tonnes of taxable aggregate qualifying for 100 per cent relief (for example exports to the Republic of Ireland)
  • 100 tonnes of material which is exempt (for example soil)

Box 1 - levy due. £1,200, ie 500 tonnes at an effective rate of £0.40 per tonne and 500 tonnes at a rate of £2 per tonne.

Box 2 - taxable and relieved tonnage. 1,300 tonnes, ie 500 tonnes at the full rate, 500 tonnes qualifying for 80 per cent relief and 300 tonnes qualifying for 100 per cent relief.

Box 3 - relieved tonnage only. 700 tonnes (300 tonnes qualifying for 100 per cent relief plus 400 tonnes, which represents 80 per cent of the 500 tonnes supplied before 1 December).

Box 4 - exempt tonnage only. 100 tonnes (exempt tonnage).

So Box 2 minus Box 3 times full rate of levy should equal Box 1 ie 1,300 - 700 = 600 x £2 = £1,200.

What about existing contracts I have entered into?

The normal rules on commercial exploitation apply as set out in Notice AGL1 Aggregates Levy, paragraphs 2.2 and 2.8.

For existing contracts you have entered into, this means that aggregate separately identifiable at the time a contract was entered into, will be subject to the relieved rate if the contract was entered into before 1 December 2010, as the contract (agreement to supply) will create a tax point at that time.

The aggregate must be specifically set aside at that time for the purpose of the contract to keep the relieved levy rate - you cannot, for example, have one general stockpile for different contracts and account for the relieved levy rate on one or all of these contracts.

If you do meet the conditions to charge the levy at the relieved rate for a contract entered into before 1 December 2010, you will, of course, have to account for the levy due on the return covering the date when the contracted was entered into.

If you have any questions about the effective increase in the Aggregates Levy rate, please contact our Helpline on Tel 0800 010 9000.

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Article Published/Sorted/Amended on Scopulus 2010-11-01 15:16:11 in Tax Articles

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