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HMRC internal manual

Business Income Manual

Waste disposal: background

One of the most common methods of waste disposal in the UK is by landfill, that is the burial of waste. Waste that is not disposed of by landfill is likely to be recycled or incinerated.

Landfill normally involves burial of waste beneath the land surface, either in naturally occurring depressions, or voids created by, for example, mineral extraction. Less commonly waste is deposited in mounds above the natural ground level. In either case the waste site operator will require planning permission and a waste disposal licence or other permission before disposal can begin.

All waste, other than totally inert waste such as builder’s rubble, will decompose after it has been deposited. The decomposition will produce a complex mixture of noxious liquids (referred to as leachate) and noxious and explosive gases. Both leachate and gases can create potential pollution problems and sites will be designed to eliminate pollution risks as far as possible.

Modern sites will often be lined with an impervious material, such as clay or plastic, and the waste will be deposited in cells engineered for the purpose. Each cell will be relatively small and, after filling, will be sealed, with the disposal of waste being transferred to a fresh cell on the site. Further cells may be engineered horizontally and vertically until eventually the completed site consists of a honeycomb arrangement of cells. After all the cells have been filled the site will be sealed with a final impermeable layer before adding layers of subsoil and topsoil as part of the restoration for whatever subsequent use is planned. The latter process may be undertaken in stages as the uppermost cells are filled.

Given the potentially polluting nature of the decomposition products waste site operators will normally be required to monitor the site and its immediate vicinity to ensure that no problems arise. In some cases there may also be requirements to treat leachate and gases. The decomposition of waste can take many decades and the monitoring and treatment, which begins when waste is first deposited, is likely to be carried out over the whole of the decomposition period, including the period after the site has ceased to be used for waste disposal.

The decision in Rolfe v Wimpey Waste Management Ltd [1989] 62TC399 makes it clear that both the costs of site preparation and restoration are capital expenditure and that no deduction is allowable on normal trade profits principles (see BIM35000 onwards). Specific legislation exists, however, to give relief for such expenditure. So far as the expenditure is capital a deduction is only available within the terms of the legislation. This legislation does not apply to any person who has elected to use the cash basis (see BIM70000 onwards).

For guidance on Landfill Tax paid by landfill site operators on the disposal of waste to landfill, see BIM67530 and the Landfill Tax Manual.