The Tax and Chancery Chamber of the Upper Tribunal has rejected a judicial review challenge brought by a private waste company over the VAT exemption enjoyed by councils on commercial waste collections.
The VAT exemption of commercial waste collection was introduced in 2011 on the basis that all waste collection authorities have a duty to arrange for the collection of commercial waste under section 45(1) of the Environmental Protection Act 1990 (if requested to do so).
In The Durham Company Limited (t/a Max Recycle) v Revenue and Customs & Anor [2016[ UKUT 417 (TCC) (19 September 2016) Mr Justice Warren said: ‘The preliminary issue is to be answered in the sense that, where a LA is making supplies of trade waste collection services to business customers in its area and does so in the performance of its duties under section 45(1)(b) EPA 1990, the supplies are “activities in which it is engaged as a public authority” within the meaning of section 41A(a) VATA 1994 and Article 13(1).
‘Whether a LA is in fact providing its commercial waste collection services under section 45(1)(b) is a matter to be determined on the facts of each case.’
The Local Government Association, an interested party in the case, has hailed the ruling, which it said would potentially save local authorities and small businesses ‘many millions of pounds’.
Had the judgment gone the other way, the LGA claimed, councils could have seen £77m per year disappear from their waste budgets. Most would have been under pressure to absorb VAT into existing charging levels, it argued.
LGA environment spokesperson Cllr Martin Tett said: ‘This is fantastic news and a huge victory for councils and it will mean savings of many millions to them at a time when many local authorities have experienced substantial budget reductions. The LGA has been at the forefront of campaigning for this exemption.
‘Councils want to do everything they can to support local businesses and potentially absorbing the extra 20% would have had a major impact on budgets, meaning them spending less on things like caring for old people and fixing potholes.’
Cllr Tett added: ‘Local authorities have delivered a transformation in waste and recycling services over the last 10 years reducing landfill by 62% and increasing recycling from 23% to over 43%. At the same time the LGA’s polling shows that more than eight in 10 of the public are happy with the way their bins are collected.
‘There is no one-size-fits-all solution when it comes to waste services and councils will always work with householders while managing budgetary cuts in order to offer the best service possible for their residents.’
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