The UK’s Landfill Tax regulations enable HM Revenue & Customs (HMRC) to require landfill site operators to designate specific “information areas” on their sites.
The purpose of these information areas is to help distinguish between taxable disposals of waste and non-taxable uses of materials at the landfill.
The guidance in LFT1 can initially seem unclear, but a closer look reveals that the requirements for “information areas” are not mandatory.
For example, HMRC states that “we may require that non-taxable uses of material take place in a designated area of your site,” which leaves room for discretion.
When considered objectively, the imposition of information areas could place an unnecessary burden on landfill operators. This means the requirement may be open to challenge in certain circumstances.
What are the requirements?
- Designation – HMRC can require a landfill operator to designate one or more information areas on the site. These areas must be clearly identified, and their boundaries defined.
- Permitted uses – HMRC will specify the permitted uses for the materials deposited in the information area, such as storage, sorting, recycling, etc. The operator must ensure materials are only used for these designated purposes.
- Recordkeeping – Landfill operators must keep detailed records of all materials deposited into and removed from the information area. This includes the date, weight, description, and intended/actual use of the materials.
- Weighing – All materials entering and leaving the information area must be weighed, either using the site’s weighbridge or an approved alternative method.
- Approval and changes – Landfill operators must obtain prior written approval from HMRC before making any changes to the information area, such as adjusting the boundaries.
Consequences of non-compliance
If a landfill operator fails to properly designate or manage an information area as required, any materials handled in that area will be treated as taxable disposals, and the full landfill tax will be due.
Overall, the information area requirements are a key part of the Landfill Tax regime, allowing the authorities to effectively monitor and tax the disposal of waste, while providing an avenue for non-taxable material management activities.
Careful compliance is essential for landfill operators to avoid significant tax liabilities.
HMRC decides on the requirements for information areas, but the landfill site operator can discuss and potentially amend them with HMRC’s agreement.
I would go a step further and suggest that if there is no proper or reasonable basis for the requirement or designation of information areas, HMRC should be challenged.
Information areas are used to distinguish between taxable disposals and non-taxable uses of material at a landfill site, but query if they are actually necessary in the specific circumstances.
HMRC decides when an information area is needed and specifies the requirements for its operation, but its decisions must be capable of reasonable justification.
Can or should HMRC require provision of information areas when the site is no longer open to acceptance of waste and all the works are related to restoration?
On what lawful basis then would HMRC be justified in requiring information areas and the requirement for records and the keeping of an information account?
These are discretionary matters and so HMRC can be held to account in relation to their actions and decisions.
HMRC decisions that are objectively unreasonable are open to appeal and certainly Judicial Review.
If you are unsure about HMRC’s requirements for information areas under Landfill Tax or believe they may be unreasonable, contact John Dyne today for expert advice and support.