Andrew Jones, exchequer secretary to the Treasury said: ‘Illegal waste sites are a blight on communities and undermine legitimate landfill operators. We have listened carefully to concerns raised by businesses and local communities and we are taking action to tackle this crime.

‘HMRC will be able to prosecute these illegal operators where necessary, who could face large fines and risk a sentence of up to seven years in prison.’

Government estimates suggests there are currently around 600 illegal sites operating in England, Wales and Northern Ireland. The Environment Agency already has the power to shut down illegal waste sites, and in 2016, they prosecuted 110 businesses and individuals for offenses related to illegal waste sites.

Under the proposed legislation, at sites without a permit, the person disposing of the waste and anyone who knowingly facilitates the disposal may be liable for the landfill tax due. All parties involved could also be liable to penalties for non-compliance or face criminal prosecution.

HMRC says safeguards will be put in place to ensure that landowners and people in the waste supply chain who, in spite of carrying out all reasonable due diligence, were unknowingly involved in the illegal dumping will not be assessed for any tax or penalties.

This measure also incorporates the changes to the definition of a taxable disposal for landfill tax published in December 2016 and which were intended for inclusion in the summer Finance Bill.

At sites with a permit, all material disposed of will be taxable unless expressly exempt. New exemptions will be introduced so that landfill tax is not charged at permitted sites on material currently outside the scope of the tax. Notification requirements have also been removed for certain activities undertaken on permitted landfill sites.

To ensure the simplest transition for the industry to the new rules, the government has decided to combine the legislation on the revised scope with the previously announced changes to clarify what material is taxable. As a result, the legislation planned for the summer Finance Bill will be incorporated into the winter Finance Bill. There will be a common implementation date of 1 April 2018.

This measure applies to sites in England and Northern Ireland. Landfill Tax was devolved to the Scottish Parliament in April 2015 and will be devolved to the Welsh Assembly from April 2018. Both devolved authorities provide for material at sites without a permit to be caught within the scope of their landfill taxes.

Jim Harra, HMRC’s director general for customer strategy and tax design, said: ‘By making the illegal disposal of waste taxable, we will deter the spread of this damaging activity by making it less profitable and reinforce the principle of “the polluter pays”’.

The consultation closes on 25 October.

Policy paper Landfill Tax: disposals not made at landfill sites is here.

The original consultation and responses on extending the scope of landfill tax to illegal disposals is here.

Report by Pat Sweet