Aggregates Levy – Contractors and developers exposed
Aggregates Levy (‘AGL’) is a tax on the ‘commercial exploitation’ of any rock, sand or gravel. ‘Commercial exploitation’ is defined very broadly and includes simply removing material from its originating site or mixing it with anything other than water. It also includes using aggregate material for construction purposes – even where the construction or civil engineering work takes place on the originating site.
So, while quarry operators are most likely to need to account for AGL, this broad definition means that any contractor or developer who comes across useable virgin aggregate during normal commercial activities, may also have an obligation to register and account for AGL. This is particularly the case if the material is taken off site (but not to landfill) or if it is used for civil engineering work on site such as a bund, pathways or roads. Given that the rate of AGL is currently £2 per tonne, this could put a serious dent in a project’s profitability.
Faced with this potential exposure to tax and penalties it may be possible to mitigate the level of risk. Having advised some of the very largest infrastructure projects in the UK about the impact of AGL and successfully lobbying HM Treasury about the design of the tax, we have extensive, detailed experience of helping clients evaluate AGL exposure and securing reliefs and exemptions.
If you feel that you may be exposed, or if you have incurred substantial AGL liabilities and you are interested to know whether less tax should have been paid, please contact us for a conversation about your options.
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