U turn number 3 for George's Budget- Skip Tax
Poor old George. He must be getting dizzy with all these U turns, the latest of which is the non- reversal of the changes to ‘skip tax’. While waste removal companies, construction firms and small businesses are celebrating the latest in a line of people power successes, George and HMRC are sitting sulkily in a corner.
You see, they claim that this is not a U turn at all. You might say that when a change in policy is announced, followed swiftly by further guidance explaining that really, the policy hasn’t changed at all, that this would look quite like a U turn. I couldn’t possibly comment.
Of course, the Treasury are a bit more sensitive than usual given the earlier letter-between T- and-V turns on pasty tax and caravan tax- after all, to keep changing his plans in the face of sustained and determined opposition might make it look a teeny bit like George doesn’t actually know what he’s doing. But as we have already established, if it looks and smells exactly like something that might make George look bad, that can’t possibly be the real case.
So what is the deal with skip tax? Well, on 18 May HMRC issued guidance (in brief 15/12) that explained that top-level landfill material (known as the fluff layer) was actually just proper landfill waste, and even if it had been sorted and recyclable stuff removed beforehand, this type of waste should not only be liable for the full rate of landfill tax, this full rate should have been paid on this waste since 1 September 2009. The difference in charge was huge- going up from a cost of £2.50 a ton to £64.50.
Understandably skip companies were a bit miffed. But the implications went further than just skips, as all the users of skips, to include construction companies and small businesses were faced with massive increases to the cost of properly disposing of waste. Some suggested that it would simply mean an increase in fly-tipping.
Industry bodies mounted a campaign, with online petitions and general loud tutting, even planning a demonstration in central London over the weekend to disrupt the glorious jubilee celebrations*. As a result, HMRC issued new guidance less than two weeks later on 1 June just in time to divert the nasty old protesters.
HMRC’s new guidance says that “ we are aware that there has been a misunderstanding of the original Brief. This has created difficulties in the market, causing the costs of waste transfers to rise unnecessarily. The current rules relating to the disposal of different types of waste have not changed.” The new brief goes on to say that the higher rate of landfill tax will only apply to certain types of waste materials that have always been subject to full rate landfill tax, not to all fluff layer materials. Which was, of course, blatantly obvious to anyone reading the first brief “the so-called reverse or top fluff layer … should be (and always should have been) liable to Landfill Tax”. Clear as crystal.
HMRC are adamant that "This is not a U-turn, it is a clarification. The rules have been in place since 2009 and the rules have not changed.” Funny then that HMRC felt the need to draft an official guidance document explaining Budget changes that were not actually changes at all.
Still, it’s not like all these changes have compromised George’s lovely “fiscally-neutral” Budget is it? David Gauke, Exchequer Secretary to the Treasury, said: "The reality is that the Budget in March was fiscally neutral, but indeed there was, if you like, a buffer zone there. This still remains a fiscally neutral budget. Even taking into account that those three changes... the Budget does not add to our borrowing."
Good job it’s not all a load of rubbish then, eh.
* Perhaps if there had been a blockade Cheryl Cole wouldn’t have been able to make it to the concert. We heard she was pants.