Section 65 and Schedule 15: Landfill Tax: Material Consisting of Fines
Summary
1.This section and Schedule amend Part 3 of the Finance Act 1996 (FA 1996) to provide for the introduction of a new testing regime to help landfill site operators to identify the landfill tax liability of waste fines disposed of at landfill sites in England, Wales and Northern Ireland. Fines are the waste produced by any waste treatment process that involves an element of mechanical treatment, and can include a wide variety of different materials some of which may be liable to landfill tax at the standard rate and some at the lower rate.
2.This Schedule establishes a new category of “qualifying fines” which will be liable to landfill tax at the lower rate and provides for the power to impose requirements with which fines must comply in order to be considered “qualifying fines”. The amendments made by this Schedule will apply to disposals made (or treated as made) in England, Wales or Northern Ireland and made on or after 1 April 2015.
Details of the Section
3.Section 65 introduces Schedule 15.
Details of the Schedule
4.Paragraph (2) inserts new subsections into section 42 of FA 1996 and makes consequential amendments accommodate the introduction of those new subsections. Subparagraphs (2) and (3) insert sections 42(3A) and 42(3B) into FA 1996; these provide that a new category of material referred to “qualifying fines” is to be eligible for the lower rate of landfill tax, and that fines are to be treated as “qualifying fines” if they are comprised of a mixture of materials specified in an order. Subparagraphs (4) and (5) make consequential amendments to section 42 of FA 1996 accommodate the insertion of the new subsections 42(3A) and 42(3B).
5.Paragraph (3) makes a consequential amendment to section 63 of FA 1996.
6.Paragraph (4) inserts a new section 63A into FA 1996. Section 63A(1) to (4) provide for the power to make an Order requiring that fines are only to be treated as “qualifying fines” if they are subjected to a specified test, and includes a power to specify the frequency with which such tests are to be carried out; as well as what documents are to be produced, and what conditions landfill operators are to adhere to, in connection with carrying out the specified test. Section 63A(5) and (6) enable these conditions to be set out in notice issued by HMRC. Section 63A(7) provides that HMRC may have the power to direct that a person must carry out the specified test in certain circumstances. Section 63A(8) defines terms used elsewhere in section 63A.
7.Paragraph (5) amends section 70(1) of FA 1996 to include a statutory definition of “fines”.
8.Paragraph (6) makes consequential amendments to section 71 of FA 1996.
9.Paragraph (7) inserts new paragraphs (2B) and (2C) into Schedule 5 to FA 1996 and make consequential amendments to that Schedule. Subparagraphs (7)(1) to (7)(3) insert the new paragraphs (2B) and (2C) into Schedule 5 to FA 1996. Paragraph (2B) provides for the power to make regulations requiring persons to give HMRC information concerning fines that are claimed to be “qualifying fines”, and to notify HMRC if the specified test indicates that fines do not meet the criteria for “qualifying fines”; while paragraph (2C) provides for the power to make regulations requiring persons to retain and preserve samples of fines that have been subjected to testing. Subparagraph (7)(4) makes consequential amendments to paragraph 10 of schedule 5 and subparagraph (7)(5) makes consequential amendments to paragraph 22 of schedule 5.
10.Paragraph (8) provides that the amendments made by this Schedule are to have effect in relation to disposals made (or treated as having been made) in England, Wales or Northern Ireland on or after 1 April 2015.
Background Note
11.Landfill tax was introduced on 1 October 1996 in support of the UK’s waste policy to increase the cost of disposal to landfill to reflect the environmental costs; and encourage more environmentally-friendly alternative behaviours. Less polluting materials are subject to a lower rate of tax and all other taxable waste is subject to the standard rate. The tax currently applies to waste disposed of at permitted landfill sites across the UK but from 1 April 2015 it will no longer apply in Scotland following the decision to devolve it.
12.Landfill site operators are responsible for ensuring the tax liability of waste is identified and charged. They raised concerns that the lower rate of tax was not being applied equitably and requested greater certainty on which to base their liability decisions, particularly in relation to fines. At present, fines are not separately identified within landfill tax legislation although they can be lower-rated if they comprise solely qualifying materials listed in legislation or mainly such materials, save for a small amount of non-qualifying material.
13.The government responded by developing proposals through consultation. This measure, secondary legislation and prescribed testing regime will provide certainty and fairness.
