Commissioners of Customs and Excise v Parkwood Landfill Ltd

JurisdictionEngland & Wales
JudgeLord Justice Aldous,Lord Justice Jonathan Parker,Mr Justice Aikens
Judgment Date28 November 2002
Neutral Citation[2002] EWCA Civ 1707
Docket NumberCase No: A3/2002/0285
CourtCourt of Appeal (Civil Division)
Date28 November 2002

[2002] EWCA Civ 1707





Royal Courts of Justice


London, WC2A 2LL


Lord Justice Aldous

Lord Justice Jonathan Parker and

Mr Justice Aikens

Case No: A3/2002/0285

Parkwood Landfill
Commissioners of Customs & Excise

D. Milne QC and R. Barlow (instructed by Nabarro Nathanson) for the Appellant

P. Havers QC and Miss P. Whipple (instructed by Solicitor for Customs & Excise) for the Respondent

Lord Justice Aldous

This is an appeal by Parkwood Landfill Ltd (Parkwood) against the judgment and order of Sir Andrew Morritt VC of 29th January 2002.


These proceedings arise out of an assessment to landfill tax amounting to just over £30,000 plus interest notified by the Commissioners of Customs & Excise (the Commissioners) to Parkwood in respect of accounting periods in 1998 and 1999. An appeal against that assessment was allowed by the VAT and Duties Tribunal in its decision dated 5th June 2001. The Commissioners' appeal against that decision was allowed by the Vice Chancellor.


The Facts– The full facts were set out in detail by the Tribunal. I therefore need only extract the basic facts necessary to understand the decision of this appeal.


Parkwood is a landfill site operator with a landfill site at Parkwood Road, Neepsend, Sheffield. Parkwood Recycling Ltd (Recycling) carries on business as recyclers of waste at Salmon Pastures, Sheffield. The majority of its shares are owned by Parkwood.


Under the terms of a waste recycling agreement between Sheffield City Council (the City Council) and Recycling, the City Council delivers waste to Recycling's premises at Salmon Pastures. Property in that waste passes to Recycling and the City Council pays a fee per tonne of waste.


At Salmon Pastures, Recycling first divides the waste into two types, namely recyclable material and waste. The waste material is taken to Parkwood's landfill site where it is deposited in the landfill and the appropriate tax is paid. The recyclable material is separated into aggregates and fines. Aggregates are concrete and other materials which are sorted, crushed and mixed so as to form mixed aggregate in pieces of 70mm or less in diameter. Fines are a soil-like material produced by sorting and mixing suitable materials to form a product which has the appearance of and many of the characteristics of soil, including the ability to support the growth of plants. It consists of pieces of material 12mm or less in diameter. Recycling sells the aggregate and fines it produces from the recycling process at an average price of £2.50 per tonne.


One of Recycling's customers is Parkwood, which buys recycled material to use at its landfill site for road making and landscaping purposes. Recycling do not have any lorries. Therefore Parkwood collects the purchased recycled material and takes it to its landfill site. Although Recycling is an associate company of Parkwood the Tribunal found that those companies dealt with each other at arm's length.


The assessment of landfill tax related to the recycled material sold by Recycling to Parkwood which was used for road making and landscaping.


The Law – Landfill tax was introduced as from 1st October 1996 by the Finance Act 1996. The tax is a creature of domestic statute in that it is not a tax required under any provisions of community law. However the United Kingdom does have obligations in community law to take appropriate steps to encourage the prevention, recycling and processing of waste under EC Council Directive 75/442/EEC. The Environmental Protection Act 1990 is the key piece of domestic legislation enacted to meet this obligation. Landfill tax can therefore be seen as a separate domestic initiative aimed at protecting the environment and securing the ambitions of the Directive.


A government White Paper of December 1995 entitled "Making Waste Work" (CM3040) preceded the imposition of landfill tax. It examined the strategies to be adopted to reduce the environmental impact of waste disposal. So far as landfill was concerned, three main objectives were set out. First, to reduce the amount of waste; second to reduce the amount of material going to landfill and third to place the cost of landfill on the person disposing of the waste. In that way waste producers would become aware of the cost of their activities. The central purpose of the landfill tax was stated to be:

"… to ensure that landfill costs reflect environmental impact thereby encouraging business and consumers in a cost effective and non-regulatory manner, to produce less waste; to recover value from more of the waste that is produced; and to dispose of less waste in landfill sites."


The relevant sections of the 1996 Act appear in Part III. They are as follows:

"39. (1) A tax, to be known as landfill tax, shall be charged in accordance with this Part.

(2) The tax shall be under the care and management of the Commissioners of Customs and Excise.

40.—(1) Tax shall be charged on a taxable disposal.

(2) A disposal is a taxable disposal if—

(a) it is a disposal of material as waste,

(b) it is made by way of landfill,

(c) it is made at a landfill site, and

(d) it is made on or after 1st October 1996.

(3) For this purpose a disposal is made at a landfill site if the land on or under which it is made constitutes or falls within land which is a landfill site at the time of the disposal.

41.—(1) The person liable to pay tax charged on a taxable disposal is the landfill site operator.

(2) The reference here to the landfill site operator is to the person who is at the time of the disposal the operator of the landfill site which constitutes or contains the land on or under which the disposal is made.

61.—(1) Where –

(a) a taxable disposal is in fact made on a particular day,

(b) within the period of 14 days beginning with that day the person liable to pay tax in respect of the disposal issues a landfill invoice in respect of the disposal, and

(c) he has not notified the Commissioners in writing that he elects not to avail himself of this subsection,

for the purposes of this Part the disposal shall be treated as made at the time the invoice is issued.

(2) The reference in subsection (1) above to a landfill invoice is to a document containing such particulars as regulations may prescribe for the purposes of that subsection.

(3) The Commissioners may at the request of a person direct that subsection (1) above shall apply –

(a) in relation to disposals in respect of which he is liable to pay tax, or

(b) in relation to such of them as may be specified in the direction,

as if for the period of 14 days there were substituted such longer period as may be specified in the direction.

64.—(1) A disposal of material is a disposal of it as waste if the person making the disposal does so with the intention of discarding the material.

(2) The fact that the person making the disposal or any other person could benefit from or make use of the material is irrelevant.

(3) Where a person makes a disposal on behalf of another person, for the purposes of subsections (1) and (2) above the person on whose behalf the disposal is made shall be treated as making the disposal.

(4) The reference in subsection (3) above to a disposal on behalf of another person includes references to a disposal –

(a) at the request of another person;

(b) in pursuance of a contract with another person.

65.—(1) There is a disposal of material by way of landfill if –

(a) it is deposited on the surface of land or on a structure set into the surface, or

(b) it is deposited under the surface of land.



The Appeal— Parkwood's position is simple. They submitted that before tax can be charged there must be a taxable disposal (see section 40(1)). For that to take place, the four conditions in subsection (2) of section 40 must be satisfied.


Parkwood accept that any relevant disposal took place after 1st October 1996. Therefore the condition in subsection (2)(d) was satisfied. They also accept that they made a disposal of material at their landfill site and in consequence of the definition in section 65(1) the disposal was by way of landfill. However they submit that the condition in subsection (2)(a) of section 40 was not satisfied as the disposal was not "as waste". As the definition of waste in section 64(1) makes clear, material used for roads and the like is not waste as the person making the disposal, Parkwood, did not intend to discard the material.


The Commissioners accept the submission of Parkwood in so far as it goes, but they submitted that Parkwood's submission concentrated upon the wrong disposal. Upon the facts as found, the City Council...

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