Revenue and Customs Brief 45 (2014): devolution of Landfill Tax to Scotland and the transitional period for the Landfill Communities Fund
Published 28 November 2014
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This publication was withdrawn on 12 January 2017.
Purpose of this Brief
The purpose of this Brief is to expose draft legislation on the devolution of Landfill Tax to Scotland on 1 April 2015 and on the arrangements for the transitional period for the Landfill Communities Fund (LCF). It also provides information about what happens at the end of that period.
Who needs to read this?
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registered landfill operators
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Environmental Bodies (EBs), including distributive EBs, authorised under the LCF scheme
Background
Landfill operators
Landfill Tax is to be devolved to Scotland on 1 April 2015. Landfill operators with sites in Scotland will no longer be liable to pay UK Landfill Tax for waste disposed at their Scottish sites. Landfill operators with sites only in Scotland will be deregistered from UK Landfill Tax. Landfill site operators with sites in both Scotland and elsewhere in the UK will continue to pay UK Landfill Tax on their non-Scottish sites. Landfill operators with sites in Scotland will be required to register with Revenue Scotland and account for Scottish Landfill Tax on disposals in Scotland, further information is available on the Revenue Scotland website.
From 1 April 2015, UK landfill operators will only be entitled to claim credit for qualifying contributions to the UK LCF if they are spent on projects in England, Wales or Northern Ireland. Scotland is introducing its own scheme, and operators in Scotland will be able to claim tax credit against their Scottish Landfill Tax liability for contributions they make to the Scottish scheme.
Environmental Bodies
Some EBs may hold unspent funds from contributions from landfill site operators throughout the UK when the tax is devolved. There will be a 2 year transitional period during which these unspent funds can continue be spent on projects throughout the UK, including in Scotland.
Landfill Tax switch-off
UK Landfill Tax is to be paid on all disposals up until 31 March 2015 even if the invoice is issued at a later date.
How will the 2 year transitional period operate?
Landfill Tax Briefing – March 2014, which was sent to all registered landfill operators on 19 March 2014, provided an outline of the scheme. ENTRUST has also published information on its website.
EBs will continue to be allowed to spend funds held at 31 March 2015 on projects in Scotland during the transitional period, that is up until 31 March 2017. During this period EBs will also be able to transfer funds to other EBs intending to fund projects in England, Wales and Northern Ireland, who will be able to continue to spend these funds after the end of the transitional period.
At the end of the transitional period EBs who fund only projects in Scotland will no longer be able to spend UK LCF funds compliantly. Changes to the Landfill Tax Regulations will allow the tax credit claimed by landfill operators relating to remaining funds to be clawed back by HM Revenue and Customs (HMRC). Landfill operators must keep records and accounts to ensure that their contributions to EBs are spent compliantly. HMRC will require these records to verify contributions are to be clawed back.
At the end of the transitional period some EBs will continue to fund projects in the rest of the UK under the LCF and also fund projects under the new Scottish LCF. Those EBs will be able to continue to use LCF funds held at 31 March 2017 on projects being carried out in England, Wales and Northern Ireland. They will be entitled to use a proportion of these remaining funds to meet their running costs, but only in proportion to costs attributable to the carrying out of approved objects in those parts of the UK.
The Landfill Tax regulations are being amended so that any LCF funds invested after the date of the legislation will be considered as unspent funds at the end of the transitional period and subject to clawback.
Changes to legislation
The Landfill Tax Regulations 1996 will be amended by the Devolution of Landfill Tax (Consequential, Transitional and Savings Provisions) Order 2015.
If you would like to make any comments about the draft legislation please email Catherine Mawer by 23 January 2015.
Timing
The changes will come into effect from 1 April 2015.
Further information
If you require further information please contact the Excise and Customs helpline on Telephone: 0300 200 3700.
Annex A
Date issued 28 November 2014