With The Scottish Landfill Tax (Qualifying Material) Order 2016 taking effect on 1 October 2016, Revenue Scotland are updating their guidance to take account of the legislative changes being introduced. Revenue Scotland consulted on the draft guidance during July 2016, with the aim of publishing the final version by 15 August 2016. The final amended guidance is intended to replace the current guidance at SLfT2006 in the SLfT Legislation Guidance.
The guidance explains the treatment of waste that consists of materials that, but for a small amount of non-qualifying material, qualify for the lower rate of SLfT (£2.65 per tonne). It also explains how to determine whether or not waste fines qualify for the lower rate of SLfT. If waste does not qualify for the lower rate, the standard rate of SLfT applies (£84.40 per tonne). The significant difference in the standard and lower rates of SLfT mean that certainty in regards to the application of rates is of paramount importance to landfill site operators.
Waste fines are fractions of material produced by a waste treatment process that involves an element of mechanical treatment. In order to qualify for the lower rate of SLfT, waste fines must meet a number of tests. From 1 October 2016 (under The Scottish Landfill Tax (Qualifying Material Order 2016) there will be a legislative requirement for a Loss on Ignition (LoI) test to be carried out – this is a test that determines the organic content of the material. However, it should be noted that just because a particular load of waste fines meets the LoI test, it does not necessarily mean that those waste fines qualify for the lower rate of SLfT – the other tests, such as a visible inspection, need to be met too.
Revenue Scotland’s amended guidance therefore aims to provide clarity and certainty on how to determine the correct rate of SLfT and on how to carry out LoI tests.
The CIOT responded to the consultation with the aim of improving its clarity. The CIOT also participated in a session of the SLfT Forum during the consultation, in order to inform its comments.
The CIOT noted a few places where the guidance could be improved by simple changes, such as the use of bullet points, to make lists clearer. We also pointed out that the first section of the guidance could be made clearer in respect of waste fines containing a small amount of non-qualifying material; currently it seems to jump into a discussion of different treatment processes, where a quick summary of the various qualifying conditions is needed first.
The CIOT response notes that the new flowchart seems to be easier to follow than the one contained in the current guidance, but the section on supporting evidence would benefit from the use of bullet points and an explanation of what is meant by “sufficient” evidence.
At first glance, the Frequency of Testing Table provides certainty on how often site operators need to carry out LoI tests on particular waste streams, but the use of some subjective indicators of risk introduces uncertainty and the possibility of inconsistency, unless there is an established method of interpreting the indicators. The CIOT response suggests trying to introduce some objectivity, by perhaps the inclusion of numerical or measurable requirements.
It is to be hoped that despite the relatively short timeframe, Revenue Scotland will be able to take on board comments on the draft guidance to provide certainty for landfill site operators to ensure the new regime operates consistently.