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HMRC Tax Guides
Members who need tax advice or or who have any queries about any tax issues should first speak to our FMB Tax Advisor Liz Bridge.
Any company informed that they are to face an HMRC Full or Aspect Enquiry or a Tax Intervention Enquiry should contact the FMB Information Services Department, Tel: 020 7092 3891.
Landfill Tax update from FMB Tax Advisor Liz Bridge
Landfill tax is a tax only paid by the operators of landfill sites. They pay £2.50 a tonne for dumping any material that is inert and £64.00 a tonne for dumping material that is active. When landfill site operators 'use' some of the material they accept to engineer the landfill sites themselves, the material they use is not taxed at all as long as it is inert. Because landfill site operators have to pay these taxes to the government, they pass on the costs of these taxes to their customers - muckaway contractors and skip hire companies - as higher fees for accepting the material. If taxes on the landfill site operators go up, their overheads go up and their fees for accepting material to be dumped go up.
HMRC have recently issued statements which say (1) that material previously treated as inert which was regularly used to engineer their sites (and therefore tax free) is actually active and is NOT to be treated as an engineering material. This means that tonnes of material they previously paid no tax on at all, is to be taxed at the higher rate. (2) that the site operators must take more care to make sure that material dumped as inert is really inert and that the operator has evidence to prove it. Many operators have probably been a bit lax about the origin of soils and construction waste and treated it as inert when it probably is active. The site operators are now nervous of being caught for taxes at the higher rate when they have not set their fees to cover such overheads.
The statements mean that the landfill tax operators believe they will be paying more tax, on the material used to engineer their sites, and because some of the tonnage that they have treated as inert probably does not have the necessary documentation to prove it qualified for the lower rate of tax.
The end result is that the landfill site operators fear they will have much more tax to pay and that as a result their overheads will rocket up. Their charges to the skip hirers and muck away contractors have therefore rocketed up to protect themselves. They are all guessing the tax increases, some may be using the opportunity to profiteer, some may know that their existing margins are so tight that they have to move their prices up in the face of increased taxes.
There is little that builders can do but shop around and attempt to get good rates for skips which will qualify for the lower rate. These will be loads which do not contain timber, paint or similar substances, or topsoil. They will be loads of rock, stone, slate and soil extracted below the top layer. More segregation of skips may allow you to get good rates on the skips containing pure inert waste. If you want good rates for inert material ask the skip operator what he will accept as inert and what he will not accept in an 'inert' skip.
It seems likely that waste will cost far more to dump in the future. Make sure that you price in these increases in all quotes from now on.
Click here to also see a News Alert item on Landfill Tax policy.
Reduced rate of VAT on the installation of energy-saving materials and systems
You can pay the reduced rate of VAT at 5% on the installation of some energy saving materials and systems in residential accommodation, or in a building intended for use solely for a relevant charitable purpose. However, if you supply energy-saving materials without installing them your supply is at the standard rate.
The reduced rate also applies to the grant-funded installation of certain heating equipment (in the sole or main residence of a qualifying person), this includes the price of the equipment itself. However, if you supply heating equipment without installing it your supply is standard-rated, even if it is grant-funded.
See HMRC VAT Notice 708/6 (November 2011) for further information.
The UK government is currently contesting EU moves to abolish this scheme. Click here for details .