If you are involved in any construction project where there is the potential of producing waste materials intended for site re-use you need to be aware of the new liabilities introduced by the changes in landfill tax. Examples include pile and trench arisings, general excavation/cut and fill, placement of piling mats and/or construction platforms.

The recent changes to Part III of the Finance Act 1996 are very significant as the legislation now not only applies to landfill sites, but it has been extended to cover any site where an illegal deposit of waste has occurred.

The result of these changes is that any construction site where there is an illegal disposal of waste is likely to be liable for landfill tax. With the current rate of landfill tax at £88.95/tonne the sums that may be due to HRMC can be very significant, with the potential for additional penalty costs (up to 100% of the tax due) and reputational damages associated with any prosecution.

These changes stem from increased abuse by a number of operators which have been reusing materials without the relevant agreements or controls (i.e. permit or exemption being in place). This is normally associated with fly tipping, badly managed landfills and/or poorly managed excavations whereby excavated materials are processed and placed on site without the necessary permit or exemption.

This is occurring despite the existence of a working framework that allows operators to re-use site won material that meets the criteria for re-use without falling foul of HMRC landfill tax. In essence, this requires that materials for re-use can be defined as not being a waste material.

The industry guidance Definition of Waste Code of Practice (DoWCoP) was produced by Contaminated Land: Application in Real Environment (CL:AIRE), an organisation which has been at the forefront for sustainable contaminated land development. The fundamental concept of the DoWCoP is that it provides a mechanism to demonstrate that excavated materials satisfy ‘the end of waste’ test and consequently should not incur any landfill tax duties.   This is a robust process and is supported by the Environment Agency.

To comply, works must be carried out under a Materials Management Plan (MMP). The MMP is a site-specific document and ensures that excavated soils can be treated and re-used on a site as long as the documented processes including any testing and tracking of the material are undertaken.

The submission of a DowCoP declaration involves liaison with a Qualified Person prior to the commencement of the site work; the developer must ensure that the correct documentation and information required is available as early as possible. Failure to do so is likely to delay the project or work. More importantly the EA is now seeking to be notified of the intended use of DoWCoP on site, prior to submission of the formal declaration and in advance of any work starting. The EA has cracked down on retrospective implementations of MMPs due to a number of abuses by certain unscrupulous operators. Failure to do so will automatically result in any stockpile of material being viewed as a waste and will attract full landfill tax liability (in addition to any potential regulatory action that may be taken).

In addition to the DoWCoP there are alternative options which may apply for certain operations. The Environment Agency has a number of exemptions (such as an U1) which can be implemented to allow the reuse of suitable material. This exemption is simpler to implement but still requires the relevant documentation to be in place prior to any on site re-use.   Generally, over the years the Environment Agency has been steadily reducing the volumes of material covered under exemptions plus there are significant limitations on the re-use of the materials. For instance, material under an U1 exemption cannot be used to infill voids. This is dictated by the Environment Agency’s drive to have to materials managed under more robust documented routes (i.e. DoWCoP, WRAP and Environmental Permits).

The production or importation of aggregate materials can be undertaken under the Waste and Resource Action Programme (WRAP). The programme allows the production of recycled aggregates arising from demolition/recycling activities. Unfortunately, the quality control associated with the production of recycled aggregates can sometimes be poor with total absence of supporting certification. Failure to have the necessary certification will result in the ‘recycled aggregate’ being deemed as waste and therefore becoming liable for landfill tax. This is a common problem on many construction sites where significant volumes of materials are imported/produced and then placed into piling mats, sometimes mixed with soil without the necessary supporting evidence that they are recycled aggregate.

The cost significance for any client, contractor and site engineer of this failure can be huge. For instance, 2,000 tonnes of imported unsuitable ‘recycled aggregate’ may attract a landfill tax liability of approximately £180K plus an additional 100% penalty. These sums, in most cases, will far exceed the total contract value of the job and do not include the inevitable reputational damage and delay costs that such a prosecution will add to the project.

The best way to avoid these potentially enormous liabilities is to engage at an early stage with a specialist contractor or consultant who can provide advice on the best correct procedures to adopt for the project, help ensure that the correct protocols are in place and remain compliant throughout the project. The DoWCoP process will be completed only when a final Verification Report has been prepared. This must be available for audit and inspection by the by the EA for a period of 2 years; until then there is a risk of attracting unwanted landfill tax liability.

Ecologia has a successful record in providing advice and carrying out remediation projects where sustainable remediation is achieved by optimising reuse of suitable material following the appropriate protocols. If you are unsure whether you have activities within your construction programme, which may be liable to attract unwanted interest of HRMC and result in a waste offence prosecution do not hesitate to give us a call.

Giacomo Maini

Managing Director
+441795 471611
Ask me a question

Leigh Anne Cammack

+441795 471611
Ask me a question