Wednesday, 30 May 2012

New 'Skip Tax' will dramatically force up skip hire charges

I have begun to receive correspondence from people concerned about, the Government’s imposition of a “skip tax”.
             
On Friday 18 May, thousands of small businesses in the skip disposal industry, employing 20,000 to 30,000 people, were affected by the changing of the tax rate for the disposal of materials from skips from £2.50 a tonne to £64 a tonne. A typical business with dozens of skips now faces bills of tens of thousands of pounds, with many expected to go out of business, damaging the construction industry still further.

The two new changes to the rules governing Landfill Tax came in on Friday 18 May. The move relates to a judgement in the HMRC v Waste Recycling Group (2008) case.

Material used to protect or ‘provide a suitable stable substrate’ at the top of a landfill will now be taxed. In the past, it has not been taxed as it was seen as an engineering material.

As I understand it, rubble and soil are used at night time to provide a cover for daytime domestic/household refuse as part of tip management and were therefore given an exemption (at £2.50 per tonne) as 'engineering waste'. The ruling has removed that exemption.

As a result, disposal sites have increased the charge per skip by hundreds of pounds almost overnight. For instance, Sita in Morden, Surrey, raised their charge for the smallest skip from £144 to £300 on 28 May.

I have every sympathy with skip hire firms and I have now contacted almost every skip hire firm in Hyndburn to listen to their concerns. One Hyndburn firm has stated to me this afternoon that they will have to lay off 18 workers almost immediately. They tell me skip hire prices are going to have rise extortionately and redundancies are expected at other firms. These costs will be passed onto builders and other tradespeople. Hardly encouraging the building industry either.

Why did the government treasury minister responsible, David Gauke MP not see this coming? Questions have to be asked if the treasury were aware that HMRC were pursuing this case and if so what was the treasury's contingency plan for the skip hire industry and connected businesses? At the moment it seems the answer is none.

George Osborne should have been aware that given the adverse reaction to the tax implications in his budget (Pasty Tax, Caravan Tax, Granny Tax, Charities Tax, Churches Tax et al) his reputation was on the line and to be ever more vigilant. A complete #omnishambles if you ask me.

The question now is, what are the government going to do and soon to resolve the problem it has presided over?

LINK; http://www.skiphiremagazine.co.uk/tag/landfill-rates/

Thousands to lose jobs due to 2460% hike in Landfill Tax

Summary

Thousands of small businesses in the skip disposal industry employing 20,000 to 30,000 people, are now under threat because on Friday 18 May, HMRC changed the tax rate for disposing of materials from skips from £2.50 to £64 a tonne – a tax hike of 2460%.

As a result, disposal sites have increased the charge per skip by hundreds of pounds almost overnight. For instance, Sita in Morden, Surrey, raised their charge for the smallest skip from £144 to £300 on 28 May.

Because the increase was introduced at such short notice, the firms, which operate on very tight margins, are unable to take away skips that are currently being used by builders and construction firms. The cost of removal is greater than the money paid by the user.

A typical business with dozens of skips faces a bill of tens of thousands of pounds, and many are expected to go out of business. This will further damage a construction industry whose struggles are responsible for sending Britain into a double-dip recession.

Campaigners say the new tax rate is another example of Government incompetence, is counter-productive, and has been badly thought through. The consequences will be:

  1.  increased unemployment as skip companies and transfer stations struggle to adapt increased fly-tipping around abandoned skips 
  2. skips attract household rubbish and objects such as mattresses if they are left unattended on the street for long periods extra costs for already struggling builders and construction companies, due to higher gate rates, the closure of skip hire firms, and increased difficulties disposing of waste; this will slow down construction projects and damage economic growth
  3. if skips cannot be economically obtained by builders, there will be a significant increase in illegal dumping of construction waste
  4. greater hazard at landfill sites – building waste is needed as a safe top layer for landfill
One 43-year-old operator has already died of a heart attack hours after a protest meeting at which he expressed concern for his family business.

Protesters’ actions so far

Angry operators blockaded traffic in Parliament Square for several hours last Thursday, and are considering a blockade of a thousand skips in London over the 4-day Jubilee weekend.

Siobhain McDonagh MP has called a campaign meeting in Committee Room 14 of the House of Commons on Thursday 31 May, and is inviting the Prime Minister, Chancellor of the Exchequer and the HMRC, as well as Labour’s Chuka Umunna, Ed Balls and Rachel Reeves.

What the waste firms want

  1. The imposition of the higher rate of landfill tax suspended for six months.
  2. Formal consultation between the industry and all relevant government departments.
  3. As part of this consultation exercise, a working group established, with industry representatives and relevant members of the government departments, to discuss and resolve the practical issues of implementing such a change.
  4. The possibility of an intermediate tax rate for certain materials to be examined.
  5. Transitional arrangements to ‘phase in’ any increase in landfill tax.
Notes

What is HMRC doing?

Two new changes to the rules governing Landfill Tax on Friday 18 May. The move relates to a judgement in the HMRC v Waste Recycling Group (2008) case. The changes are:

Material used to protect or ‘provide a suitable stable substrate’ at the top of a landfill will now be taxed. In the past, it has not been taxed as it was seen as an engineering material.

As well as this, material sourced from screening, grit and recycling processes will no longer be eligible for the lower £2.50 rate of landfill tax applied to inert material and will be charged the full rate of £64 a tonne – a tax. This is the same full rate that is paid for “active” material that can produce, for instance, methane.

Case Study: Reliable Skips Ltd, Mitcham

Mr and Mrs Tapping run a small business, Reliable Skips Ltd, and are anxious that businesses like theirs will go bust because of the extra costs and the lack of time to adjust the prices they charge customers.

Reliable Skips have 75 skips for hire, and 41 are currently out with customers. Because those skips had been hired out at rates agreed prior to the new HMRC rates, they cannot dispose of the skips’ contents without making significant losses and are considering bankruptcy.

Prior to the change in guidance, Reliable Skips made a profit of up to £60 per skip, but the charge for disposing of a skip has increased by a minimum £156 for the smallest skip, considerably more for other skips.

If Reliable Skips goes out of business, the skips will remain on the road and become centres of rubbish dumping and other anti-social behaviour, while all staff will be made redundant.