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
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
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