Draft Scottish landfill tax legislation published

Out-Law News | 22 Apr 2013 | 9:16 am | 2 min. read

The Scottish Government has published plans for its new landfill tax, which is due to replace a UK-wide taxation scheme from 2015.

If passed in its current form, the Landfill Tax (Scotland) Bill will tax waste sent to landfill to encourage the proper disposal and recycling of materials. It will also introduce a Scottish "communities fund", paid for by landfill operators, which will provide financial support to environmental organisations and benefit communities living in close proximity to waste disposal sites.

Infrastructure law expert Graham Wallace of Pinsent Masons, the law firm behind Out-Law.com, said that the Bill was "predominantly an enabling framework", with specific legislative provisions due at a later date.

"Many aspects of the Scottish landfill tax will remain unclear until the publication of associated regulations and the forthcoming Tax Management Bill," he said. "However, the Bill and accompanying documents do clarify that the Scottish Government intends to proceed with the approach set out in its recent consultation document. Broadly this means that the initial intention is to mirror many aspects of the UK landfill tax regime."

"A key point for the waste industry to note is that the Scottish Government is pressing ahead with the Scottish Environmental Protection Agency (SEPA) as the tax collector, despite industry concerns about this giving rise to a conflict of interest with SEPA's additional role as regulator," he said.

Landfill tax is a tax on the disposal of waste. It aims to encourage waste producers to produce less waste and to consider sustainable waste management options, including recycling and anaerobic digestion. Since its introduction in 1997, the current tax has contributed to a 32% reduction in the proportion of waste sent to landfill in the UK and a similar increase in recycling, according to figures provided by the Scottish Government.

Under the Scotland Act 2012, the Scottish Parliament will be able to introduce and manage taxes on the disposal of waste to landfill from April 2015. It will also be given the power over taxes on the purchase or leasing of land and buildings, such as the existing Stamp Duty Land Tax (SDLT). UK taxes will be 'switched off' in Scotland in April 2015, together with a corresponding reduction in the 'block grant' Scotland receives from Westminster.

From this date, the Scottish Government will assume responsibility for determining the nature of these taxes in Scotland including rates, thresholds and exemptions. It will also take on responsibility for collecting the tax and enforcing payments.

The Scottish Government has proposed that environmental protection regulator SEPA be given responsibility for administering and collecting the new tax. This is a change from the current regime, under which tax is collected by HM Revenue and Customs. The Bill also contains provisions allowing illegal disposal activities to be taxed, in another change from the UK regime. It taxes the disposal of waste by way of landfill at a landfill site, but allows land to be treated as a landfill site even if it has not been authorised as such.

Under the Bill, the person who "made" or "knowingly permitted" a disposal at an unauthorised site will be liable to pay the tax. Landfill site operators will be liable to pay the tax at authorised sites.

Finance Secretary John Swinney said that the new tax would "better reflect Scottish values and Scottish circumstances".

"I am eager to use this opportunity to ensure that landfill tax, environmental protection legislation, regulation and compliance regimes are all aligned and working in the best interests of our environment and our economy," he said.