The Court of Appeal has backed a High Court decision to refuse an Essex landfill operator’s tax exemption claim.
Ebbcliff Ltd claimed that it was statutorily exempt from landfill tax for waste that it had deposited on the site during restoration works.
However, three appeal judges have held that, although the company was entitled to claim exemption for a “restoring” layer of topsoil, it was liable for tax on a layer of inert waste that had been used to level the site.
The court limited the “restoration” exemption in section 43C of the Finance Act 1996 to the final step in the tripartite procedure, which included filling the site, constructing the cap and the work of restoration.
Before Ebbcliff purchased the former quarry site, known as Mardyke Farm, South Hornchurch, in 1996, it had been used for unlicensed waste-disposal operations and had been restored to a poor standard.
A 1988 report, commissioned to assess the suitability of the 94 acre plot for residential development and for use as public open space, revealed that substantial remedial work would be necessary. It recommended that the site be reopened for the deposit of inert materials, such as subsoil, bricks, concrete and sand, to allow the ground surface to be adequately covered.
In 1997, Ebbcliff incorporated the deposit of inert waste below a 1m thick clay sealing layer, which was subsequently covered with a soil restoration layer.
However, Customs and Excise refused the company’s claim for a full landfill tax exemption under section 43C. It held that only the final process of layering the area with soil could come with the exemption.
Both the High Court and the Court of Appeal have agreed, stating that, of the three stages involved – the filling of the site, the construction of the cap and the work of restoration – only the latter was exempt.
Peter Gibson LJ added that such a conclusion was supported by the express exclusion from the section 43C exemption of “capping waste”, the second step in the process.
He said: “If the exemption were designed to cover all disposals of inert waste made for the purposes of restoring a derelict site to beneficial use, it is hard to see what policy reason there would be for excluding the capping layer from the exemption, while including both the waste below and the soil above in the exemption.”
Commissioners of Customs & Excise v Ebbcliff Ltd Court of Appeal (Peter Gibson and Jonathan Parker LJJ and Laddie J) 30 July 2004
Paul Shadarevian (instructed by Courts & Co) appeared for the appellant; Owain Thomas (instructed by the solicitor to Customs & Excise) appeared for the respondents.
References: EGi Legal News 3/8/04
