Chapter 2 – Key concepts
Meaning of “aggregate”
Section 3: Meaning of “aggregate”
13.This section defines the meaning of the word “aggregate” for Part 1 of the Act: this definition is subject to section 4 on excepted processes however.
Section 4: Excepted processes
14.Subsection (1) makes further provision about the meaning of “
15.Subsection (2) then defines what “excepted processes” are. This includes, for example, the manufacturing of cement from limestone, and any process by which a “relevant substance” is extracted or otherwise separated from any aggregate, with the “relevant substances” in question listed in subsection (3). Under subsection (4) the Scottish Ministers have the power to alter this list by regulations subject to the negative procedure.
Taxable and exempt aggregate
Section 5: Taxable aggregate
16.This section sets out the fundamental legal basis of the new Scottish aggregates tax, that tax is only to be charged on taxable aggregate as defined here: that is, on any occasion on which aggregate is subject to commercial exploitation in the circumstances set out in section 7 of the Act, it is taxable, unless specifically exempted under section 6.
Section 6: Exempt aggregate
17.This section defines the types of aggregate that are exempt from Scottish aggregates tax, setting out each exemption in subsections (2) to (8).
18.Subsection (2) provides that aggregate is exempt from the tax if it is, or derives from, any aggregate that has already been subjected to a charge to tax. Subsection (9) clarifies that for these purposes aggregate has already been subjected to a charge to tax, and therefore this exemption will apply, if there was no entitlement to a tax credit against at least some of the tax previously charged on the aggregate – or if there was, then the amount of the credit was less than the amount of the tax. So conversely, if there has previously been tax credit applied of the same amount than the amount of tax, then the exemption from tax under subsection (2) would not apply, and tax would be chargeable.
19.In addition, subsection (10) provides that previous tax credits relating to specific industrial or agricultural processes (see section 15(6) of the Act) are to be disregarded for these purposes, and so in such cases, the previous tax is effectively counted as tax in which there was no entitlement to tax credit – so the exemption under subsection (2) would still apply.
20.Finally, subsection (9)(b) provides that the exemption under subsection (2) would also apply where, before the date on which section 6 of the Act comes into force, there has been an occasion on which a charge to the UK aggregates levy has arisen under the Finance Act 2001.
21.Subsection (3) provides that aggregate is exempt from the tax if it has previously been used for construction purposes (including before the Act comes into force).
22.Subsection (4) provides that aggregate is exempt from the tax if, on the date on which this section comes into force, it is on a site other than either its originating site (see section 9) or a site that is required to be registered under section 18 under the name of the site operator.
23.Subsection (5) provides that aggregate is exempt from the tax if it consists wholly of aggregate won by being removed from the ground incidentally during the excavation of transport or utilities infrastructure (for instance during the building of roads), and in connection with the construction, modification or improvement of that structure or infrastructure.
24.Subsection (6) provides that aggregate is exempt from the tax if it consists wholly of aggregate won in the course of dredging carried out exclusively for the purpose of creating, restoring, improving or maintaining a river, canal, watercourse, channel or approach.
25.Subsection (7) provides that aggregate is exempt from the tax if it consists wholly of the spoil from any process by which coal, lignite, slate, or a substance listed in section 4(3) of the Act has been separated from other rock after being extracted with that other rock.
26.Subsection (8) provides that aggregate is exempt from the tax if it consists wholly or mainly of the substances listed, including coal.
Commercial exploitation of aggregate
Section 7: Commercial exploitation
27.This section sets out how the commercial exploitation of aggregate is defined for the purposes of Part 1 of the Act.
28.Subsection (1) provides that a quantity of aggregate is subjected to exploitation if it is removed from a site falling within subsection (2), i.e. from the originating site of the aggregate (see section 9); from a site which is not the originating site of the aggregate but is registered under the name of the same owner; or from a site not falling within those categories to which the quantity of aggregate had been removed for the purpose of having an excepted process (see section 4) applied to it, but at which no such process had in fact been applied to it.
29.A quantity of aggregate is also subjected to exploitation if it becomes the subject of an agreement to supply it to any person. For these purposes (as per subsections (5)-(6)) the time when a quantity of aggregate becomes the subject of an agreement to supply it to any person is either when the agreement is entered into, or in a case where the quantity of aggregate is not separately identifiable when the agreement is entered into, at the time when it is appropriated to the agreement. However, any supply effected by the transfer or creation of land rights is not included within the definition of “
30.A quantity of aggregate is also subjected to exploitation if it is used for construction purposes, e.g. in building sites.
31.A quantity of aggregate is also subjected to exploitation if it is mixed, otherwise than in permitted circumstances, with any material or substance other than water. Aggregate is often mixed with other substances in the production of materials such as concrete and asphalt. For these purposes (as per subsection (7)) a quantity of aggregate is mixed with a material or substance in permitted circumstances if the material or substance with which it is mixed consists wholly of a quantity of taxable aggregate that has not previously been subjected to commercial exploitation in Scotland, and the mixing takes place on a site which, in a case where it falls within subsection (2) in relation to any part of the aggregate included in the mixture, so falls in relation to every part of it.
32.Subsection (3) clarifies that exploitation is commercial exploitation if it is carried out in the course or furtherance of a business carried on by the person (or one of the persons) responsible for subjecting it to exploitation. For these purposes, “
33.Subsection (4) sets out exceptions to the definition of commercial exploitation for the purposes of Part 1 of the Act. This includes cases where aggregate is removed from one registered site to another, where both sites are registered under the name of the same person: this allows for circumstances where aggregate is moved between sites for processing or storage before being used or sold, Subsection (4) also includes cases where aggregate is moved to a registered site for the purpose of having an excepted process (as defined in section 4) applied to it on that site.
34.Subsection (8) provides that for the purposes of Part 1 of the Act, the exploitation of a quantity of aggregate is taken to occur in Scotland if the aggregate is in Scotland at the time when it is subjected to exploitation, or where aggregate is subjected to exploitation under subsection (1)(a) or (b) as a result of the movement of aggregate to Scotland from elsewhere in the UK.
35.Subsection (10) gives the Scottish Ministers a regulation-making power, subject to the affirmative procedure, in order to make further provision about the circumstances in which the exploitation of aggregate is taken to occur in Scotland for the purposes of subsection (8) of this section. Regulations under subsection (10) may amend subsection (8) and other provisions of the Act to make provision of that kind.
36.Subsection (12) applies to the occupation of a site by agriculture or forestry businesses. In such a case the exception to commercial exploitation at subsection (4)(d) applies in a modified form: so no commercial exploitation occurs if aggregate returns to the land at the site from which it was won, or at a site occupied by the same business, but the exception applies without the need for this to take place by virtue of the aggregate being used for a purpose connected with winning aggregate or other minerals from the site in question.
Section 8: Persons liable to pay tax
37.This section sets out the fundamental rule that the persons liable to pay the tax charged on a quantity of taxable aggregate are the persons responsible for subjecting it to commercial exploitation. Subsection (2) then defines responsibility for these purposes. This depends on the type of commercial exploitation that takes place: for instance, where commercial exploitation of aggregate takes place when is not on its originating site or a connected site, and the exploitation consists of using the aggregate for construction purposes, the person liable to pay tax is the person responsible for using it for those purposes; if the exploitation consists of supplying the aggregate, then the person liable to pay tax is the supplier.
38.Subsection (3) clarifies that exploitation of aggregate is only defined as commercial exploitation for the purposes of Part 1 of the Act if the exploitation takes place in the course of a business carried on by a person: and for these purposes this includes any activity of the Scottish Administration, the UK government, or of a local authority or charity).
39.Subsection (4) provides that the term “
40.Subsection (5) provides that where there is a supply chain arising from an agreement to supply aggregate, every person in the chain is liable to pay the total amount of tax chargeable on the aggregate as a result of the original agreement, unless they have acquired the aggregate from a supplier who is registered for tax under section 17 of the Act (the purpose being to prevent the creation of an artificial chain in order to avoid liability for tax).
41.Subsection (6) provides for joint and several liability where more than one person is charged with the tax by virtue of this section: this means that each person involved is responsible for the full liability of the tax, and if one person is unable to pay, the others are liable for paying that person’s share.
Sites and site operators
Section 9: Originating sites
42.This section defines the term “
43.Where aggregate has been mixed on a site before the Act comes into force, subsection (2) states that that site is taken to be the originating site of all the aggregate comprised in the mixture.
Section 10: Operators of sites
44.This section sets out how an operator of an aggregate site is defined for the purposes of Part 1 of the Act. This means the occupier of a site and also, if any other person exercises control over aggregate on that site, that other person.
45.Subsection (2) provides that exercising control over aggregate means that the person wins aggregate from that site, stores it there, or carries out an excepted process (as defined in section 4) at that site.
