Friday, 8 June 2012
HMRC landfill tax clarification: http://www.hmrc.gov.uk/briefs/excise-duty/brief151...
HMRC landfill tax clarification: http://www.hmrc.gov.uk/briefs/excise-duty/brief151...: http://www.hmrc.gov.uk/briefs/excise-duty/brief1512.htm HMRC effectively changed the rules thereby increasing the cost of disposal of all...
Thursday, 7 June 2012
http://www.hmrc.gov.uk/briefs/excise-duty/brief1512.htm
HMRC effectively changed the rules thereby increasing the cost of disposal of all fine material for Recycling companies by over 2,460%. They were able to say that this was not really a change, rather a clarification of an existing ruling that had not been applied correctly.
Skip companies have responded in different ways. Some panicked and according to media have increased prices by up to 300%. Others have been more realistic and have added 30% to 40% to their charges. Still others have not changed their prices at all.
So how can this be? According to the cote from HMRC, if the material originates in a MRF, it must generate a full standard landfill tax rate of £64 per tonne rather than the reduced rate of £2.50 per tonne. This is because HMRC say there is no way that this material can be cleaned to the quality that effectively makes it inert, which was the intent of the reduced rate. Fair enough you say. However, if a MRF has an alternative to landfill, say at an inert site, or restoration work, or indeed through a soil washing plant, then what charges should they be applying?
Also, some unscrupulous MRF's have been shredding waste so that it can be described as fines and qualify for the lower rate. This is a joke since the so called fines may be up to 90% organic. this is aided and abetted by some unscrupulous landfill operators. The impact has been to create an unfair advantage for these MRF's. This seems to be able to happen because the EA and HMRC do not talk to each other. As far as the EA is concerned these fines are disposed of in the proper place, a landfill, and the issue of tax is someone else's issue.
One inconsistency of the whole landfill tax regime is that inert sites are not allowed to charge the full standard landfill tax rate, by law. So is there any way they can accept this material? This is not clear, but it is assumed that HMRC are not aware of this loophole. Only inert material should be used for restoration work, for which there is no landfill tax.
Soil washing plants are also an interesting option. They are expensive to set up and run. So presumably the cost is significant and probably higher than the reduced rate of landfill tax. Also the contamination washed out will be at best landfill waste grade and at worst hazardous, both significantly more expensive material to dispose of.
So how can these companies continue to operate at the old prices? Its simple! They don't operate legally!
In this day and age, when we are all aware of the issues go Global Warming and Environmental Protection, how is it that customers will continue to turn a blind eye to these cowboys to take advantage of the lower prices. Shame on you!
Lastly, as the government continue to reduce the size of the civil service and quangos, there will be fewer staff to ensure that proper practices are maintained. Good companies will lose market share and we will find fly tipping in our forests and remote areas on the increase.
So having had 2 weeks of upheaval in the industry, what happens now? The rules as recently clarified have not changed.
Why the disparate rate of price increases? On average most MRF's generate between 30% to 40% fines. At an average gate fee of £80 per tonne pre HMRC clarification, and 40% fines, the cost increase impact was about £25 per tonne. With a reasonable margin on to of that, prices should be going up about £30 per tonne, or 37.5% rather than the reported 400% the media is reporting!
HMRC effectively changed the rules thereby increasing the cost of disposal of all fine material for Recycling companies by over 2,460%. They were able to say that this was not really a change, rather a clarification of an existing ruling that had not been applied correctly.
Skip companies have responded in different ways. Some panicked and according to media have increased prices by up to 300%. Others have been more realistic and have added 30% to 40% to their charges. Still others have not changed their prices at all.
So how can this be? According to the cote from HMRC, if the material originates in a MRF, it must generate a full standard landfill tax rate of £64 per tonne rather than the reduced rate of £2.50 per tonne. This is because HMRC say there is no way that this material can be cleaned to the quality that effectively makes it inert, which was the intent of the reduced rate. Fair enough you say. However, if a MRF has an alternative to landfill, say at an inert site, or restoration work, or indeed through a soil washing plant, then what charges should they be applying?
Also, some unscrupulous MRF's have been shredding waste so that it can be described as fines and qualify for the lower rate. This is a joke since the so called fines may be up to 90% organic. this is aided and abetted by some unscrupulous landfill operators. The impact has been to create an unfair advantage for these MRF's. This seems to be able to happen because the EA and HMRC do not talk to each other. As far as the EA is concerned these fines are disposed of in the proper place, a landfill, and the issue of tax is someone else's issue.
One inconsistency of the whole landfill tax regime is that inert sites are not allowed to charge the full standard landfill tax rate, by law. So is there any way they can accept this material? This is not clear, but it is assumed that HMRC are not aware of this loophole. Only inert material should be used for restoration work, for which there is no landfill tax.
Soil washing plants are also an interesting option. They are expensive to set up and run. So presumably the cost is significant and probably higher than the reduced rate of landfill tax. Also the contamination washed out will be at best landfill waste grade and at worst hazardous, both significantly more expensive material to dispose of.
So how can these companies continue to operate at the old prices? Its simple! They don't operate legally!
In this day and age, when we are all aware of the issues go Global Warming and Environmental Protection, how is it that customers will continue to turn a blind eye to these cowboys to take advantage of the lower prices. Shame on you!
Lastly, as the government continue to reduce the size of the civil service and quangos, there will be fewer staff to ensure that proper practices are maintained. Good companies will lose market share and we will find fly tipping in our forests and remote areas on the increase.
So having had 2 weeks of upheaval in the industry, what happens now? The rules as recently clarified have not changed.
Why the disparate rate of price increases? On average most MRF's generate between 30% to 40% fines. At an average gate fee of £80 per tonne pre HMRC clarification, and 40% fines, the cost increase impact was about £25 per tonne. With a reasonable margin on to of that, prices should be going up about £30 per tonne, or 37.5% rather than the reported 400% the media is reporting!
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