mminent changes to the UK landfill tax system have been branded ‘unhelpful’ by a Welsh Government minister, as Wales prepares to set its own rates and rules from April 2018. And, Mark Drakeford, Cabinet Secretary for Finance and Local Government, has also claimed he is ‘not prepared’ to confirm landfill tax rates will remain in line with England. The minister’s concerns have been reported in the Welsh Government Finance Committee’s Stage 1 Report into the Landfill Disposals Tax (Wales) Bill. In the Committee report, Mr Drakeford explains that he is still awaiting a response from HMRC on how the Finance Bill 2017 will affect landfill site operators in Wales. The Bill, which was formally launched by the UK Treasury in last week’s Budget, includes tweaks to the definition of disposal to ensure all materials sent to landfill sites will be taxable ‘unless expressly exempt’ (see letsrecycle.com story). It follows a number of legal challenges against HMRC from waste companies that have contested which materials should be liable for taxation. Wales. Mr Drakeford had written to HMRC on 4 January seeking assurances that the UK government’s plans to change taxable disposal definitions would not ‘confuse’ operators in the run-up to Wales imposing its own set of rules. When asked for an update by the Welsh Government’s Finance Committee on the impact of the proposed changes, Mr Drakeford responded: “We are unconvinced that this is the right moment to change the way the whole system operates. We don’t think Scotland intends to change the system, and we’re not tempted to do it in Wales. “Until we see the colour of the regulations, it’s difficult for us to make a fully-informed assessment of what the position would be one way or another. HMRC has assured officials that the changes will have no practical effect as far as Wales is concerned, because although the legislation may be changed, the scope and the administration of the tax will not. So, I’m bound to consider it, Chair. The timing is not helpful.” Definitions The Committee’s report meanwhile sheds further light on how the Welsh Government could interpret landfill tax exemptions once the powers are devolved on 1 April 2018. The Welsh Bill will propose classifying some existing exemptions as ‘reliefs’ which will have to be claimed by operators in tax returns. These include materials removed from water, such as dredged material, material resulting from mining and quarrying operations and materials used in landfill site restoration or the re-filling of former quarries. Explaining the reclassification, Mr Drakeford claims that the Welsh Government will clearly define which materials are liable for landfill tax. He added: “By calling them exemptions, they are outside of the scope of the taxpayer, we expect nothing, whereas the others, we expect a tax return and certain criteria to be met.” Rates The Committee has also called on the Welsh Government to provide ‘further detail’ on where it will set landfill tax rates no later than October this year. It warns delays could create confusion and lead to instances of ‘waste tourism’ whereby loads are sent to cheaper landfill sites over the border. While Mr Drakeford told the Committee he understood the need for consistency and similarity, he added: “I’m not prepared to go as far as saying, at this stage, that the rates will be the same. I think there is a difference there. As I say, I could say today, and put them on the face of the Bill, that they are the same, and then they could change across our border while this Bill was going through the Assembly, and they wouldn’t be the same after all.”
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