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United Kingdom VAT & Duties Tribunals (Landfill Tax) Decisions
You are here: BAILII >> Databases >> United Kingdom VAT & Duties Tribunals Decisions >> United Kingdom VAT & Duties Tribunals (Landfill Tax) Decisions >> Easter Hatton Environmental (Waste Away) Ltd v Revenue & Customs [2007] UKVAT(Landfill) L00026 (29 November 2007)
URL: http://www.bailii.org/uk/cases/UKVAT/Landfill/2007/L0026.html
Cite as: [2007] UKVAT(Landfill) L00026, [2007] UKVAT(Landfill) L26
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- any application for renewal of the agreement beyond the date of expiry must be made 2 months prior to expiry of the approval
- material could only be stored for up to 3 years and that after this time landfill tax would become due on any material remaining.
L0026
Landfill tax – expiry of tax free area agreement – assessment – whether discretion to make assessment, whether discretion exercised properly or at all: purpose of Landfill Tax legislation, assessment discharged. Finance Act 1996 s50.
EDINBURGH TRIBUNAL CENTRE
EASTER HATTON ENVIRONMENTAL (WASTE AWAY) LTD Appellant(s)
- and -
THE COMMISSIONERS FOR
HER MAJESTY'S REVENUE & CUSTOMS Respondents
Tribunal: (Chairman): T Gordon Coutts, QC
for the Appellant(s) Grahame Reid
for the Respondents Sian Jeffries, Shepherd & Wedderburn WS
© CROWN COPYRIGHT 2007.
This appeal is against an assessment of £36,118.60 in respect of 18,059.30 tonnes of inert soil and stones at an area within Easter Hatton Landfill. The material would appear to have been accumulated over some time. On 15 November 2000 a tax free approval area was recognised within the site. The initial approval was for the period 8/11/00 to 30/11/01 and it was then said that approval was given subject to any application to renew being made 2 months prior to expiry. The quantity was limited to 100,000 tonnes. It was also said that this material could only be stored for up to 3 years "after this time you will have to account for tax on it". From the correspondence, the facts in which were accepted by the Appellant, it appeared that on a visit to the premises on 5 February 2007 an officer of the Respondents had noted that the tax free area agreement had expired and that no request had been made for renewal. Subsequent matters were described in a letter of 2 March 2007, which accompanied the assessment under appeal, as follows:
However, in order to allow restoration at the site to continue, on 28 March 2003 Mr Clark prepared and issued a new agreement to cover the period 01/12/2001 to 30/11/2003 thereby providing for agreements covering the maximum 3 years allowed. In his accompanying letter Mr Clark highlighted the fact that the agreement would expire on 30 November 2003 and that landfill tax would become due on any material remaining on the site after this date.
On 14 October 2003, Mr Colin Veitch contacted this office requesting an extension to the agreement that was due to expire on 30/11/2003.
On 14 January 2004 Mr Clark met with Mr Veitch in order to discuss the continuing need for a Tax Free Area. Despite the fact that the three year limit for the storage of material had expired Mr Clark agreed to issue a new agreement on an exceptional basis to facilitate restoration at the site.
A major factor in Mr Clark's decision to allow this new agreement was the lack of accurate figures showing the amount of waste that was in the Tax Free Area on 30 November 2003. This was due to the fact that a proper record of material into and out of the Tax Free Area did not exist at that time.
The new agreement was dated 15 January 2004 and covered the period 01/12/2003 to 30/11/2006. The agreement clearly stated that
On 12 October 2004 Mr Clark visited you at Easter Hatton Landfill site. During this visit Mr Clark inspected the site and discussed the Tax Free Area agreement in place for the period 01/12/2003 to 30/11/2006 with you. As a result of his visit Mr Clark wrote to you on 29 October 2004 confirming, amongst other matters, record keeping requirement in respect of the Tax Free Area.
When on the visit by an officer on 5 February 2007 it was noted that no application had been made for renewal, the Appellant sought to rectify that instantly by letter dated 12 February 2007 seeking, in the circumstances disclosed, a further extension of the approval. It was accepted by the Respondents that at the time when the ownership of the company changed hands in April 2004 certain information was not passed to the purchaser, and now operator, including the terms of the Tax Free Area agreement. It was accordingly accepted that the current management of the Appellant was not aware of the terms of the new agreement.
The matter was expressed thus by the Respondents officer:
I appreciate that you may not have been fully aware that the Tax Free Area agreement had expired and that material could only be held in the area for a maximum of 3 years. I have also noted your comment that, had you been aware that the agreement was due to expire, you would have applied for a new agreement. However, given that the area had been the subject of agreements spanning 6 years and that the material on the site had not been put to the qualifying use within this time it is unlikely that a new agreement for the site would have been issued.
The factors which were placed before the Respondents officer in the letter of 12 February were explained as follows:
On investigating this further if appears that when the original application for the Tax Free Area, was made by Mr Jamieson, it was the intention to carry out capping in 2006. However permission was sought from SEPA to delay the capping of Phase 1 as a pilot scale trial of a new technology called LANDair commenced in June 2005. This technology if successful would have required alteration of the cap and restoration design. Assessment of data from the trials and discussions with the company involved continued into 2006. A decision was made in May of 2006 not to go ahead with this technology. This was then too late in the year to tender and carry out capping works during 2006.
The delays in capping as detailed above are the reason that the normal 3 year period for the Tax Free Area has been insufficient. The change of ownership in 2004 of the Landfill caused some confusion with the documentation for the Tax Free Area. The new Landfill Manager misinterpreted the regulations, having never seen the original agreement entered into by the previous owner. It was believed that any material deposited had three years from the time of deposition. Had the expiry date of 30.11.06 been appreciated then an application for a new agreement (which has now been made) would have been made within the timescale.
There has never been any intention to dispose of the material in this area, and it has always been stored here for use in restoration work. The material will be used up and accounted for between March and July 2007 to restore phase one of the landfill as detailed in the original application for a Tax Free Area.
The Respondents paid no attention to the said letter other than in their assessment letter of 2 March 2007 stating "I am in receipt of your letter of 12 February 2007 and note your comments therein". The clear and specific request for an extension was not dealt with at all, and no attention was given to the specific and limited purpose disclosed for the tax free area.
The Appellants grounds of appeal as framed concentrated on an argument that the company had a reasonable excuse for missing the deadline for submission of extension. In his grounds of appeal and in evidence it was made clear that capping of phase 1 of the site was completed in May 2007, the material in question had all been used during that work as tax free restoration material and none remains in the "Tax Free Area". Further it was accepted that the Appellants record keeping under the new regime was meticulous and contrasted markedly with the previous experience of the Respondents.
The Tribunal noted the Respondents approach to the whole matter as being "it is unlikely that a new agreement would have been issued". The justification for that assertion is impossible to find other than in the comment that the material had been on site for 6 years. That approach was carried further in the review letter of 19 April 2007 which emphasised the Respondents approach that with the expiry of the time in the agreement the tax had to be paid.
The Appellants plea of reasonable excuse does not apply to the matter of the tax. It applies to the Tribunal's jurisdiction in relation to penalty and interest, neither of which, sensibly, were sought in this case. Had they been the Tribunal would have had little hesitation in finding a reasonable excuse and questioning them.
The Tribunal raised the matter of the discretion of the Commissioners in making an assessment under Section 50 Finance Act 1996. They chose to issue an "assessment" under that section when in the situation present nothing required to be assessed, the records kept were meticulous and the quantity ascertainable down to a fraction of a tonne.
It is plain from the history of this matter and from the letters of 2 March and 19 April 2007 that the Respondents did consider themselves possessed of a wide scope and discretion in the matter of landfill tax. That is evidenced by their actings in firstly issuing a new agreement in March 2003 after the previous agreement having expired in November 2001 without application for renewal and again in January 2004 in response to a request made less than 2 months before the expiry of the then agreement which was not made before the expiry. The reasons given at that time were set out at the letter of 2 March as astonishingly being the lack of accurate figures showing the amount of waste in the area. That surely was a matter which could have been dealt with by way of an assessment but it was not. Instead of issuing an assessment the Commissioners granted a new agreement, on the above extraordinary reasoning.
Is there a discretion and has it been exercised properly or not at all? The Tribunal do consider that there is a discretion available in the making of any assessment following its own reasoning in Technip Coflexip Offshore Ltd, 23 June 2005.
In the present case the Tribunal considers that the discretion has not been exercised at all and that the Commissioners have disabled themselves from exercising it by not dealing with the specific request for renewal and thus ignoring any of the circumstances and proceeding on the simple mechanical basis of lapse of time.
The Commissioners at least by the time of the review letter knew of the fact that the whole material was about to be entirely consumed in restoration work; they knew or ought to have known that removal from the site of the material which was there otherwise was impracticable and that it had become impracticable to deal with removal after the failure of the projected revised scheme for dealing with the waste material.
Additionally it appears to the Tribunal that in dealing with this legislation the purpose of the legislation should be borne in mind. Landfill Tax is and never was merely a revenue raising exercise. It had control of Landfill as a major purpose and compliance with EU directives on that matter. If the purpose is control then that was, or was by April 2007, achieved.
Further due to the lapse of time the tax cannot now be recovered by the Appellant on what were exempt deposits. That must be a factor. The assessment amounts to a penalty for not timeously renewing the permission for a tax free area.
In all the circumstances therefore it does not appear that there was any, let alone a proper exercise of discretion and in the Tribunals view the assessment cannot stand. It will be discharged.
EDN/07/9501