Scottish Landfill Tax Regulations laid in Parliament

By Annie Kane | 13 January 2015 | Add a Comment

The Scottish Landfill Tax (Administration) Regulations 2015 have been laid in Scottish Parliament, making provision for the administration and assurance of the Landfill Tax (Scotland) Act 2014, which comes into effect in April.

Laid in Scottish Parliament on Friday (9 January), the law outlines how the Scottish Landfill Tax will work in practice once the UK Landfill Tax is ‘switched off’ in Scotland on 31 March 2015.

From 1 April 2015, Revenue Scotland will collect and manage the new tax with support from the Scottish Environment Protection Agency (SEPA), however, any landfill operators intending to carry out a taxable activity must, from 16 February 2015, notify Revenue Scotland within 30 days of this intention.

As announced in the Budget package for 2015/16, every tonne of ‘standard’ waste sent for disposal at a registered Scottish landfill site will be liable to a tax of £82.60, while less polluting wastes will be taxed at £2.60 a tonne. These taxes must be paid to Revenue Scotland at the same time as the tax return is made (or at the same time of the amendment if an amendment is made), and no later than 44 days after the end of the accounting period. A landfill operator’s first accounting period begins on the day they become registered.

Non-disposal areas

As many landfill sites now operate energy and/or material recovery facilities, the Scottish Government has introduced a tax exemption for materials being stored in designated ‘non-disposal areas’ for reuse and recycling (including recovery). However, these areas must be declared and landfill operators must keep records on the non-disposal areas for inspection by Revenue Scotland Officers (when requested).

Tax credits

The regulations provide for a tax credit system, and landfill operators can claim a credit for material where Landfill Tax has already been paid and where conditions in relation to the reuse and recycling of waste have been met.

For example, credits can be issued where:

the disposal of material has been made with the intention that the material would be recycled or incinerated;
the material, or some of it, has been recycled, incinerated or permanently removed from the landfill site with the intention of doing so;
the material has been removed for use (other than by way of a further disposal) at a place other than a relevant site;
the material has been recycled, incinerated or removed no later than one year after the date of disposal or, where water had been added to the material in order to facilitate its disposal, has taken place no later than five years after the date of the disposal;
the materials have been removed for use in restoration of a relevant site (and the material involved has previously been used to create or maintain temporary hard standing, to create or maintain a temporary screening bund or to create or maintain a temporary haul road);
the disposal is in breach of the terms of the licence or permit, as the case may be, by virtue of which the land constitutes a landfill site;
the registered person has been directed to remove the material comprised in the disposal, or some of it, by SEPA and the registered person has removed it, or some of it; and
a further taxable disposal of the material has been made and, except where the registered person is the person liable for the tax chargeable on that further disposal, the registered person has paid to the site operator an amount representing that tax.

Over a defined accounting period a landfill operator can deduct the credit from the amount of tax due and may receive payment if the credit is greater than the amount of tax due.

However, where a person fails to submit a return, Revenue Scotland may withhold payment of credits until the taxpayer has complied with the requirement to submit the return.

The amount of the credit received will be equal to the tax that was charged on the disposal, except in cases where only some of the material is removed, whereby the amount of the credit shall be in proportion to the tax on the materials removed.

If a customer of a landfill operator becomes insolvent, the landfill operator may also claim a tax credit for bad debt if they meet all of the conditions set out in the regulations. However, certain sums must be offset against the amount of the bad debt.

Scottish Landfill Communities Fund

The regulations establish a Scottish Landfill Communities Fund (SLCF) to provide funding for community or environmental projects via a registered Distribution Body, in recognition of the ‘disamenity’ experienced by those in the vicinity (10 miles or less) of landfill sites or waste transfer sites (handling 2,500 or more tonnes of waste destined for landfill).

Landfill Tax operators in Scotland will be able to contribute 10 per cent more of their tax liability to the SCLF, in return for tax credits, than they would be able to under the UK limit (5.6 per cent, up from 5.1 per cent).

For each contribution made, landfill operators will be entitled to credit in respect of 90 per cent of the amount, and either bear the remaining 10 per cent of the contribution themselves or ask an independent third party to make up the difference. A contribution and any income derived must be spent on an approved objective of the SLCF within two years of the contribution being made.

From 1 April 2015, credit against UK Landfill Tax for contributions to authorised environmental bodies may only be claimed where it relates to projects in England, Wales and Northern Ireland. However, there will be a two-year transitional period, from 1 April 2015 until 31 March 2017, during which unspent funds held by Environmental Bodies on 31 March can be spent on projects located throughout the UK, including in Scotland.

SESA 'pleased' with water discount

Speaking of the regulations, Stephen Freeland, Policy Advisor at the Scottish Environmental Services Association (SESA), said: “SESA is pleased that the regulations confirm that Scottish landfill operators, and their customers, will continue to benefit from the water discount.

"SESA had argued that the removal of the water discount (as previously proposed) would place Scottish businesses at a competitive disadvantage to their UK counterparts, and would simply encourage the transport of material over longer distances to disposal markets elsewhere in the UK."

Read the full Scottish Landfill Tax (Administration) Regulations 2015.