The First-tier Tax Tribunal (FTT) has become a decisive forum for resolving disputes concerning landfill tax liability, particularly as the scope and complexity of environmental taxation have expanded.
A recurring theme in these proceedings is the pivotal role of expert evidence – often a critical factor in determining the classification and tax treatment of waste materials – and ultimately the “difference” between a multi-million pound liability, or an affordable headache.
Landfill Tax can be a fundamental game-changer for waste operators.
Expert evidence, a decisive factor
Landfill tax liability frequently hinges on technical questions: Is the material inert? How is the material comprised and constituted? Does it qualify for the lower rate? Does it fall within the scope of the 2011 Qualifying Material Order?
These are not merely factual issues but require specialist knowledge, making expert testimony indispensable. Rule 15 states that any party in the proceedings must seek the permission of the Tribunal before serving (and therefore relying on) an Expert Report.
The FTT’s approach to expert evidence is guided by the principles articulated in The Queen (on the application of Biffa Waste Services Ltd) v HMRC [2017] UKUT 269 (TCC), where the Upper Tribunal emphasised the overriding need for expert evidence to be both independent and objective.
Further case law and practical implications
In Veolia ES Landfill Ltd v HMRC [2016] UKFTT 564 (TC), the Tribunal scrutinised the methodology and impartiality of expert witnesses, ultimately favouring evidence that was transparent and grounded in established scientific practice.
The case underscored the Tribunal’s preference for experts who can clearly articulate the basis for their conclusions, rather than merely advocating for a party’s position. More latterly, in the case of Singleton Birch Ltd & FCC Recycling (UK) Ltd v HMRC [2021] UKFTT 440 (TC), the FTT further refined their expectations and guidance.
This case takes the practical considerations one step further.
Here, the Tribunal indicates that the parties should attempt to collaborate in advance of sourcing expert evidence to identify the key “issues” and to narrow areas of agreement and disagreement.
Only then, with the permission of the Tribunal should Experts be instructed.
This case also serves as a warning to ensure that a particular expert must confine the expert opinion only to the scope of his/her expertise.
Looking ahead
As landfill tax disputes become more technically nuanced, the FTT’s reliance on expert evidence is likely to intensify.
Practitioners should be mindful of the Tribunal’s expectations regarding the independence, clarity, and scientific rigour of expert testimony.
It is important to choose the right expert for the particular case and the specific issues.
The expert should be asked the right questions and very carefully guided as to scope and extent of the instructions.
Practitioners must also attempt to engage with HMRC to identify and clarify the contentious issues.
The parties should always defer to the permission of the Tribunal.
The danger for parties in failing to properly instruct experts is twofold – (1) the risk of some (or all) of that evidence being ruled inadmissible and (2) exposure in costs.
If you are dealing with the changing rules around environmental taxes, using the right expert evidence can make all the difference.
At Dyne Solicitors, we specialise in waste and environmental disputes.
We handle all aspects of Landfill Tax cases, including regulatory, criminal, property and commercial issues, both before and after legal action is taken.
If you have any questions regarding Landfill Tax, please do not hesitate to contact one of our team (John Dyne, Alex Sandland or Patrik Jones-Wright) on 01829 773100.