The government has confirmed it plans to re-introduce the aggregates levy credit scheme (ALCS) which offers tax credits to qualifying Northern Ireland quarries, four years after the scheme was suspended pending the result of a European Commission investigation over whether it breached the rules on state aid
Under ALCS there is an 80% tax credit for aggregates originating in Northern Ireland in return for quarries meeting environmental standards. The scheme originally ran from 1 April 2004 to 30 November 2010, when it faced challenges after the British Aggregates Association (BAA) claimed that the scheme provided unlawful state aid.
The Commission has now published full details on its decision to rule in favour of the scheme, confirming that it was in line with state aid rules when it operated between 2004 and 2010.
The government was required to suspend the ALCS from 1 December 2010 during the Commission investigation, but is committed to reinstating the scheme. However, this can only be done if the scheme receives further approval from the Commission on whether it meets the latest state aid rules, as there is currently a further investigation into the levy.
Priti Patel, exchequer secretary to the Treasury, said: ‘We welcome this decision, which ends a period of unnecessary uncertainty for quarry operators in Northern Ireland. We remain committed to reinstating the credit scheme as soon as possible.’
The Commission’s decision also sets out the requirement for the UK to implement a scheme which will reimburse 80% of the levy paid on aggregate imported into Northern Ireland from other member states between 1 April 2004 and 30 November 2010.
The government will legislate in 2015 for this, with HMRC due to provide more details shortly.
The European Commission decision is here: http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_18859
