Our engagement with affected sectors
The highest-profile environmental taxes in the UK currently are climate change levy (‘CCL’) (the nearest we have to a carbon tax so far), landfill tax (‘LFT’) (now devolved to Scotland and Wales) and aggregates levy (‘AGL’) (a resource tax that can increase substantially the cost of any infrastructure project). The main aim of all environmental tax is to increase the cost of environmentally damaging behaviours (by industry, the public sector and indeed the general public) to the extent that more environmentally friendly alternatives are adopted.
But each tax must also raise revenue for HM Treasury and this dual role has led to increasing complexity in the design and operation of environmental taxes. In these circumstances, paying the right amount of environmental tax can be very challenging and, as can be seen from the case summaries below, ensuring that environmental tax is not overpaid can be critical to a project’s viability. In this spirit of ‘getting it right’, we have engaged with clients in almost all commercial and public sectors.
Some environmental tax issues (a non-exhaustive list)
Climate change levy (CCL)
- Are reliefs and exemptions properly applied to downstream supplies and is adequate evidence held in support of this?
- An additional ‘carbon price support’ rate is applicable where certain fossil fuels are used to generate – is this properly applied?
- Relief is available for certain energy-intensive sectors, and where energy commodities are used for their non-energy properties – has this been identified and claimed?
- Landlords supplying energy to tenants may, potentially, access reliefs on their behalf.
Landfill tax (LFT)
- The standard rate is over 30 times higher than the reduced rate (for qualifying material). Has the correct rate been applied?
- Material put to certain uses on a landfill site may be tax-free. As a site operator, have you identified these? As a waste producer, is this tax-free treatment recognised in your disposal costs?
- LFT is calculated according to weight. Water content can sometimes be excluded from this calculation – do you have a water discounting agreement with HMRC?
- Depositing material anywhere (not just on a licensed landfill site) is subject to LFT doing so would require a permit. Have you placed spoil or other material on your land unaware of this requirement?
Aggregates levy (AGL)
- Anyone commercially exploiting rock, sand or gravel must account for AGL. Have you accessed material in the course of development works and used it, or removed it from the site, incurring an AGL liability?
- Using aggregate material for construction work brings it into the scope of AGL, but certain groundworks and reclamation activities may not be taxable – but the supplier needs to be told before you can benefit.
How Centurion can help
We have the experience and knowledge to help clients in all aspects of these taxes including:
- Resolving disputes with HMRC or HM Treasury regarding compliance or tax liabilities.
- Conducting reviews of an organisation’s environmental tax costs and potential for reliefs, exemptions or other savings.
- Analysing infrastructure and development plans to establish where environmental tax costs may arise and report on the potential for savings.
- Dealing with enquires from HMRC in relation to any of these taxes, including where the Environment Agency (or regional equivalents) have raised concerns.
- Advise energy generators and suppliers of the CCL and LFT responsibilities, compliance requirements, records and systems, supply agreements.
- Assist energy-intensive sectors to pursue CCL relief where energy commodities are used for their non-energy characteristics.