At Budget 2016 Chancellor George Osborne announced the government was looking to reform the Landfill Tax legislation, in response to considerable legal challenge by parts of the industry over what constitutes a taxable disposal, which he said had resulted in uncertainty and increased complexity.

HMRC says the aim of the consultation is to seek views on the proposals to put the definition of a taxable disposal for landfill tax purposes beyond doubt, without altering the scope of the tax.

The government is proposing to amend the criteria for determining when Landfill Tax is due so that all material disposed of at a permitted landfill site is taxable, subject to certain exceptions. A set of narrowly defined exceptions will be included, consistent with the activities that are not currently taxable.

Specified activities which are currently not taxable are listed within the Excise Notice Landfill Tax LFT1: a general guide to landfill tax and replicated at Annex A.  HMRC says these activities will remain not taxable.

This proposal will differ from the approach adopted in the Prescribed Activities Order which specifies the activities that are subject to the tax. The government believes this will simplify the definition of a taxable disposal and bring any uncertainty to an end, and ensure that new activities are not introduced to undermine the tax.

The consultation will also gather information and receive views on hazardous waste falling within the scope of the Qualifying Material Order.

The criteria for waste material to be liable to the lower rate of Landfill Tax are set by the Treasury and published in HMRC guidance. One of the criteria is that the waste material must not be hazardous.

However, some types of waste material are listed in The Landfill Tax (Qualifying Material) Order 2011) and liable to the lower rate of Landfill Tax, regardless of their hazardous classification. This contradicts the Treasury criteria and the principle that the more polluting the waste, the more the tax paid.

The consultation will look at the issues around hazardous waste that falls within the Qualifying Material Order and attracts the lower rate of Landfill Tax, such as incinerator bottom ash and furnace slag.

If the government decides to make legislative changes there will be a further consultation on draft legislation. Proposed changes would be included in Finance Bill 2017 for implementation from 1 April 2017, and HMRC has said there are no plans to make any changes that would affect the Landfill Tax position prior to these changes coming into effect.

The consultation closes on 18 August 2016.

HMRC consultation on Landfill Tax: improving clarity and certainty for taxpayers is here