Environment – Landfill tax – Waste disposal – Appellant commissioners appealing against decision of Upper Tribunal concerning taxable disposals at landfill sites – Selected layers of waste laid to protect cell liner (fluff) – Layer of shredded waste (EVP) incorporated as protection layer in landfill cell – Whether waste or EVP disposed of “with the intention of discarding it” within section 64 of Finance Act 1996 – Appeals allowed
The respondent companies operated landfill sites, charging customers for taking away unwanted material. The appellant commissioners collected landfill tax on every tonne of taxable waste disposed of at those sites. Two separate appeals concerned whether “black bag” waste material disposed of at landfill sites in a particular way was taxable.
In the first appeal, the First-tier Tribunal (FTT) dealt with the use of certain black bag waste (fluff) in constructing landfill cells. The FTT held that, although the black bag waste was “used” to protect the liner of the landfill cell, all the material was destined for landfill if it was not to be “fluff”. The phrase “by way of landfill” in section 40 of the Finance Act 1996 was a qualification that allowed the exclusion of deposits that were clearly not by way of landfill. The deposit of the black bag waste to remain in landfill permanently was not an exception: [2018] UKFTT 181 (TC).
In the second appeal, the FTT reached similar conclusions about the deposit of shredded waste (EVP) at the top of landfill cells. The FTT held that the various deposits were made with the intention of discarding waste and were all landfill: [2018] UKFTT 199 (TC).
The Upper Tribunal issued one decision dealing with both appeals. It held that the respondents were using the fluff and the EVP. They did not intend to discard it and it was not taxable: [2020] UKUT 1 (TCC); [2020] PLSCS 4.
The appellants appealed. The question was whether the black bag waste was a taxable disposal because it was a disposal “with the intention of discarding the material” within section 64 of the 1996 Act.
Held: The appeals were allowed.
(1) By section 40 of the 1996 Act, tax was payable on a taxable disposal. That required the four conditions in section 40(2)(a)-(d) to be satisfied. The disposal had to be: (a) a disposal of material as waste; (b) made by way of landfill; (c) made at a landfill site; and (d) made on or after 1 October 1996. For that purpose, a disposal was made at a landfill site if the land on or under which it was made constituted or fell within land which was a landfill site at the time of the disposal. The only condition at issue was whether the disposal was “a disposal of material as waste”. By section 64(1) that would be the case if “the person making the disposal does so with the intention of discarding the material”. “Discard” was an ordinary English word with no technical meaning in the context of landfill site operations. It was not defined in the statute and, in the absence of any statutory definition, or any special meaning, parliament was assumed to have intended it to bear its ordinary meaning, read in context.
The FTT was right in its application of the statutory provisions and such use as the respondents made of the fluff and EVP was insufficient to negate their otherwise obvious intention to discard the material. The respondents were carefully disposing of all the material as waste by putting it into the cell in a way that did not damage the cell infrastructure and that reduced the likelihood of problems arising in the cell either during filling or once it was capped and sealed. Given that the respondents accepted that the other conditions of section 40(2) were satisfied, those were all taxable disposals: HMRC v Waste Recycling Group Ltd [2008] EWCA Civ 849; [2009] STC 200 considered.
(2) The 1996 Act had to be construed against the background of its purpose: That suggested that various indicators would be relevant, depending on the facts. All the conditions set out in section 40(2) had to be satisfied at the same time. The time at which the relevant intention had to be established would often be the time at which the material arrived in its final resting place in the cell. The intention would therefore usually be that of the operator unless section 64(3) was engaged, which was not the present case. When considering who was the relevant disposer and what his intention was at that time, various factors might need to be weighed up, depending on the circumstances of the case. Those included (non-exhaustively) whether it was being placed somewhere within the perimeter of the landfill site but not being placed in the cell; whether it was processed in some way by or on behalf of the operator; whether it was separated out from the main body of waste and stored for a time or conversely whether it was placed in the cell immediately or soon after it arrived at the landfill site; whether it was put into the cell with the expectation that it would stay there permanently; whether there had been a passage of title to the disposer; and the economic circumstances surrounding the acquisition of the materials in question, who paid whom for the material and whether the disposer would need to buy in alternative material if there was not enough of the material in dispute. The practicality of applying or disapplying the tax to the material in question was also relevant. No factors which served to indicate as a matter of fact whether material was being discarded by the person concerned should be excluded from consideration unless such an interpretation of the provision was unavoidable. All or some of those factors might, in any particular case, help the tribunal to decide whether parliament intended that that activity in relation to that material manifested an intention to discard the material so as to satisfy the condition in section 40(2)(a): Customs and Excise Commissioners v Parkwood Landfill Ltd [2002] EWCA Civ 1707; [2002] PLSCS 265 considered.
Melanie Hall QC, Brendan McGurk and David Gregory (instructed by the General Counsel and Solicitor to HM Revenue and Customs) appeared for the appellants; Roderick Cordara QC and Zizhen Yang (instructed by KPMG LLP) appeared for the first respondent in the first appeal and (instructed by Ernst & Young LLP) for the second respondent in the first appeal and the respondent in the second appeal; Sam Grodzinski QC (instructed by Simmons and Simmons LLP) appeared for the third and fourth respondents in the first appeal.
Eileen O’Grady, barrister
