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In a legal test case centring on a landfill site at Neepsend, Sheffield, the court of appeal has ruled that the Cus...
In a legal test case centring on a landfill site at Neepsend, Sheffield, the court of appeal has ruled that the Customs and Excise had no right to charge landfill tax on the deposit of recycled material which has been discarded by a local authority as waste prior to recycling.

A high court decision in January by Sir Andrew Morritt the vice chancellor that Customs and Excise were entitled to charge tax such deposits was overturned and a previous decision in June last year of the VAT and Duties Tribunal upheld.

The case centred on deposit of material at a landfill site where the site operator, Parkwood Landfill Ltd, had been found liable for any landfill tax. The material in question came from the works and highways department of Sheffield City Council which pays for disposal of unwanted material to Parkwood Recycling Limited, which operates a recycling facility at Salmon Pastures, Sheffield.

The material was sold to Parkwood Recycling Ltd which crushed, sorted and mixed it with other material and graded it before selling it on to Parkwood Landfill.

The customs men claimed that Parkwood Landfill was liable to pay landfill tax amounting to just over£30,000 on the recycled material deposited on its site in 1998 and 1999, since the council had discarded it. Parkwood Landfill, on the other hand claimed that the material had been disposed of by Parkwood Recycling and that in those circumstances there was no tax liability.

In the court of appeal David Milne, counsel for Parkwood, said the case raised 'a very important point of construction concerning section 40 of the Finance Act 1996, the basic landfill tax, which was introduced by that Act.'

He said it was not only important for the appellant but also for the waste management industry as a whole and that if the high court ruling was upheld

it would 'cause that industry very real operational problems'.

He told the court that the decision imposed 'landfill tax on recycled materials purchased by a landfill site operator for landscaping, roads, etc, but not on freshly quarried material purchased by them for the same purpose.'

However, Philip Havers, counsel for customs men, said it had always accepted that one of the consequences of their arguments was that the 'landfill tax operator will be liable for landfill tax on the recycled material it purchases for site engineering purposes, whereas no tax would be due if freshly quarried material was purchased.'

But, he said this consequence of the Act was of minor impact, occurring only in those comparatively rare situations where landfill site operators choose to purchase recycled materials for site engineering. He said it was 'a lesser evil' when compared to the substantial damage to the scheme and purpose of the Act which results from the appellants' analysis.

Allowing the appeal, however, Lord justice Aldous, who was sitting with Lord justice Jonathan Parker and Mr Justice Aikens, said he did not believe 'the scheme of the Act was that submitted by Mr Havers.'

He continued: 'The Act must, in my view, be construed against the background of its purpose. There is no dispute that one of the purposes of the Act was to promote recycling and to reduce the amount of waste going to landfill. To tax recycled material used for road making and the like at landfill sites would be contrary to that purpose. If that had been part of the scheme of the Act, then I would have expected there to a clearer indication in the relevant sections.'

He said the 'commissioners accept that their argument leads to the result that companies such as Parkwood will be liable for tax if they use recycled material for site engineering or building purposes, whereas they would not be liable for tax if they used fresh materials.

'That cannot have been the intention of parliament when they introduced the landfill tax. The purpose of the legislation was to tax waste material deposited at landfill sites and not to tax deposits at landfill sites of useful material produced from waste material.'

He said the tribunal had been 'correct to concentrate upon the disposal at Parkwood's landfill site because it was that disposal which was made by way of landfill. They rightly held that that was not a disposal of waste'.


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