The government is to publish further clarification on its controversial landfill tax changes but insists it is not making a U-turn.
Her Majesty’s Revenue and Customs (HMRC) told Construction News’ sister title MRW that Labour claims the Government was set to ditch earlier guidance were not true.
The shock announcement follows skip operators threatening to block the streets of London over the Jubilee weekend after the Government announced tax clarifications which have seen the tax cost of disposing of certain materials increase by a staggering 2,460% overnight.
A HMRC spokesman said: “We are going to be issuing guidance later today to provide further clarification.
“There is no U-turn or policy change it is just to provide further clarification in the event of any misunderstandings.”
Prominent Labour MP Tom Watson tweeted: “Treasury have climbed down on the 2500 % skip tax hike - withdrawing the guidance issued last Friday. Another u-turn.”
Waste minister Lord Taylor told MRW no resolution had been reached on what was primarily a HMRC matter but called for swift resolution.
He said: “The next step will be to make sure that the definitions are clearly expressed.
“I come from a business background myself and I understand how important it is to have clear guidelines about what government is actually demanding of the industry.
“To the extent that I am able to put pressure on HMRC, if I feel definitions are not clear enough then I will make sure that that happens.”
Lord Taylor said landfill charges on so-called inert material should remain at a reduced rate
He said: “Where inert material is involved we accept the case for a reduced charge is justified. That is the department’s opinion on the matter,” he said.
But industry insiders warned they now faced a considerable battle over clarification of what is considered “inert” material.
A senior figure said the definition used by HMRC and Defra to classify “inert ” was at odds with what many in the industry felt was fair.
The change that’s rocked the industry
So-called “inert” fines from trommels and screens (material that is not going to contaminate landfill and does not count towards the EU biodegradable landfill targets) was charged at the lower landfill tax rate of £2.50.
But now merchants will have to pay the same full rate of £64-a-tonne to landfill which is paid for “active” material, including non-inert fines that can be biodegrade and create methane.
In addition, waste or material used to cover waste in landfill areas before they are capped will also be taxed at the full rate. This had previously been regarded as “engineering material”, such as bund walls and caps.
The move, outlined in a HMRC briefing document published on 18 May, relates to a judgement in the HMRC v Waste Recycling Group (2008) case.