Judith Kelly OBE, HMRC’s Deputy Director of Environmental Tax Policy, sets out how HMRC is cracking down on Landfill Tax evasion, and working with other enforcement agencies to tackle waste crime.
Since the launch of our Landfill Tax Compliance strategy in 2015, HMRC has been working with industry and the environment agencies on measures to drive out non-compliance in the waste sector. At Autumn Budget 2017, the government announced the latest of these measures – to extend Landfill Tax to material disposed of at illegal waste sites in England and Northern Ireland.
Similar changes were introduced by the Scottish government when Landfill Tax was devolved in 2015, and will be introduced by the Welsh government when the tax devolves in April 2018.
Illegal waste sites currently evade Landfill Tax, bypass regulatory controls, and undercut legitimate operators. From 1 April 2018, any material in England and Northern Ireland in situ at an illegal waste site, or illegally disposed of after this date will be liable to a charge to tax.
The person disposing the material and anyone who knowingly facilitates the disposal may be liable for Landfill Tax at the standard rate, regardless of its composition. All parties involved could also be liable to a penalty of up to 100% of the tax due, or face criminal prosecution. Landowners and people in the waste supply chain who, in spite of carrying out all reasonable due diligence, were unknowingly involved in the illegal disposal will not be liable for any tax or penalties.
Enforcement
The government has invested in more HMRC staff to enforce the new legislation, in addition to extra funding at Budget 2016 to tackle tax evasion in the waste sector. The government also announced at Autumn Budget 2017 a further £30m for the Environment Agency to help tackle waste crime, on top of the £23m provided in the 2015 Spending Review.
Cross-Departmental Approach
We have developed the changes to tax legislation to complement environmental regulation, adopting the same definition of an illegal waste site and the due diligence requirements to protect innocent parties. We are also working with the environment agencies to identify illegal waste sites that will be within the scope of the tax and the persons potentially liable.
Marie Fallon, Director of Regulated Industry at the Environment Agency said: “Waste crime is a serious issue and we are making progress to tackle it. Last year the Environment Agency closed down 824 illegal waste sites and are taking even tougher action on anyone involved in illegal waste activity, through higher fines and custodial sentences. But we cannot do it alone – we work closely with partners across government to prevent and disrupt illegal activity. This includes roadside stop checks alongside Driver and Vehicle Standard Agency and HMRC to ensure waste is being disposed of legally. The Environment Agency’s specialist crime unit also work with police and local councils to track down waste criminals and prosecute.
The Northern Ireland Environment Agency (NIEA) is also working with HMRC investigating waste crime, as well as the laundering of rebated fuel which produces toxic waste that is often dumped in the countryside.
Further Measures Under Consideration
On 8 December 2017, HMRC launched a consultation ‘tackling the hidden economy: public sector licensing’. Closing on 2 March 2018, the consultation invites views on making tax compliance a condition of permitting and licensing in the waste management sector, with the aim of making it harder for unscrupulous operators to enter the sector.
Key to the success of these announcements is our continuing work with the legitimate waste management industry and trade body representatives. If you think someone is evading tax you can report it via the Tax Evasion Hotline on 0800 788 887 or you can report tax fraud online.
You can also pass on information about waste crime anonymously by calling Crimestoppers on 0800 555 111, or online.
