How to deal with environmental tax issues


Xeinadin Group



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Most companies in the UK don’t know how to deal with environmental taxes at all. Fortunately, we can lend a hand. Here’s how.

Currently, the highest-profile environmental taxes in the UK 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.

In these circumstances, paying the right amount of environmental tax can be very challenging

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.

Examples of environmental tax issues

CCL (climate change levy)

  • 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.

LFT (landfill tax)

  • 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 licenced 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?

AGL (aggregates levy)

  • 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 scope of AGL, but certain ground works and reclamation activities may not be taxable – but the supplier needs to be told before you can benefit.

How we can help

Centurion VAT Specialists, one the Xeinadin firms, has the experience and knowledge to help you in all aspects of these taxes with consultancy, dispute resolution and training.

Across all environmental taxes we can help with the following:

  • Developments and infrastructure projects – evaluating environmental tax risk and reliefs;
  • Liability analysis of activities including energy generation and supply, waste management activities, waste production, mining and quarrying;
  • Accounting systems adaptations to ensure environmental taxes are properly captured and declared on a timely basis;
  • Interaction with HMRC, Environment Agency (and devolved departments), and;
  • General advice regarding the environmental tax implications of commercial and non-business projects.

Dispute resolution
Our knowledge and experience allow us to:

  • Advise clients in connection with HMRC inspections and any environmental tax assessments arising;
  • Review the basis of environmental tax assessments and advise on potential counterarguments;
  • Help clients seek Tax Counsel opinion, and;
  • Draft requests for HMRC reviews and formal appeal notices.

Centurion VAT Specialists offers bespoke training in environmental taxation tailored to meet your specific needs. Training is not limited to finance personnel but can be equally relevant to commercial, engineering, legal and operational teams.

Need help in dealing with environmental tax issues? Contact us so Centurion VAT Specialists can offer the knowledge and support you need.

Get to know more about Centurion VAT Specialists!


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