HMRC urges businesses to assess landfill and waste compliance risk

HMRC and the Environment Agency, together with the Welsh Revenue Authority, Revenue Scotland and the Joint Unit for Waste Crime, have launched a ‘one to many’ letter campaign highlighting the risks to business of the criminal infiltration of the waste sector. HMRC frequently uses the ‘one to many’ approach, which is to send an identical letter to a specific subset of taxpayers that it considers are affected by its contents, in order to spread its message to a wide, but targeted audience.

The letter (2-page / 335KB PDF) invites businesses to attend an educational webinar later this month.

The campaign is urging businesses to ensure compliance with landfill tax and its Welsh and Scottish equivalents. Landfill tax is a weight-based tax due on material disposed of at permitted landfill sites in England and Northern Ireland and at sites and on disposals where a permit is required but not obtained. There are two rates of tax: a standard rate, currently £103.70 per tonne from 1 April; and a lower rate, currently £3.30 per tonne from 1 April, for the least polluting material.

Landfill tax is paid by those who dispose of material on a permitted landfill site to the operator or controller of that site, who then pays it over to HMRC.

However, if waste is disposed of on land that is not a landfill site, then the tax is still chargeable and HMRC can seek to enforce payment of the tax on anyone who either makes the disposal, or knowingly causes knowingly permits the disposal.

Businesses which have any reason to dispose of waste are therefore at risk, for example if the waste disposal service they use is not legitimate and seeks to dispose of waste at an illegal site or declares higher rate waste as lower rate waste. Similarly, landlords who rent property may find that they have become liable because waste has been illegally disposed of on their land.

Sam Wardleworth, tax expert at Pinsent Masons, said: “Businesses with waste disposal needs must ensure that they have due diligence procedures to monitor the accuracy of the landfill tax being paid on the waste that is disposed of on their behalf by third parties. Equally, landlords must ensure they are protected from illicit disposal of waste through contractual protection but also practical measures such as regular site visits. All businesses need to be in a position to show HMRC that they have sufficient procedures in place.”

Although landfill tax was devolved to Scotland in 2015 and to Wales in 2018, both devolved taxes are similar in design and structure to the tax in England and Northern Ireland. The risks discussed in this joint campaign are equally applicable to Welsh and Scottish waste disposal, even if those taxes are collected and enforced by the Welsh Revenue Authority and Revenue Scotland respectively.