Commissioners of Customs and Excise v Parkwood Landfill Ltd
| Jurisdiction | England & Wales |
| Judgment Date | 29 January 2002 |
| Neutral Citation | [2002] EWHC 47 (Ch) |
| Date | 29 January 2002 |
| Court | Chancery Division |
[2002] EWHC 47 (Ch).
Chancery Division.
Sir Andrew Morritt V-C.
Phillipa Whipple (instructed by the Solicitor for Customs & Excise) for Customs.
Richard Barlow (instructed by Narbarro Nathanson) for the taxpayer.
The following cases were referred to in the judgment:
ARCO Chemie Nederland v Minister van Volkhuisvesting Ruimtelijke Ordening en Milieubeheer (Case C-418/97) [2000] ECR I-4475
Attorney-General's Reference (No. 5 of 2000) UNK[2001] EWCA Crim 1077
Berridge Incinerators v Nottingham County Council (unreported, 1987, QBD)
C & E Commrs v Darfish Ltd TAX[2002] BTC 8003
Cheshire County Council v Armstrongs Transport (Wigan) Ltd[1995] Env LR 62
ICI Chemicals and Polymers Ltd v C & E Commrs [1998] V & DR 310
Inter-Environnement Wallonie ASBL v Region Wallonne (Case C-129/96) [1997] ECR I-7411
Landfill tax - Waste material - Disposal - Recycled waste - Council contracted to dispose of unwanted material through recycling company - Taxpayer purchased recycled material for use in road-making and landscaping - Whether necessary condition for "disposal of material as waste" that material was of no use whatsoever - Whether council derived financial benefit from disposal to recycling company and disposal therefore precluded from being disposal of material as waste - Whether process of recycling gave rise to relevant change in material - Whether use to which taxpayer put material precluded its recognition as disposal by way of landfill - Finance Act 1996, Finance Act 1996 section 40 subsec-or-para (2) section 64 section 65 section 70ss. 40(2), 64, 65, 70.
This was an appeal by Customs against a determination of the VAT and Duties Tribunal that the deposit of recycled aggregates and fines at a landfill site for purposes of landscaping and road-making did not involve a disposal of waste and so did not attract liability to landfill tax.
The council entered into an agreement with the taxpayer's parent company under which the parties set up and became shareholders in a recycling company ("Recycling") for the purposes of disposing of unwanted material from the council's highway works. The council paid a fee to Recycling for the collection and disposal of the unwanted material. Recycling processed, graded and sorted it into saleable and non-saleable material and the non-saleable materials were sent to landfill. The saleable materials included aggregates and fines, some of which were sold by Recycling to the taxpayer for use in road-making and landscaping. The council was entitled to dividends on the profits made by Recycling. Customs took the view that the taxpayer was liable to tax on the recycled materials deposited on its site because the council had discarded them as waste. The taxpayer appealed against the decision to raise an assessment to landfill tax. It was not disputed that the definition of material contained in Finance Act 1996, Finance Act 1996 section 70 subsec-or-para (1)s. 70(1) applied to the subject matter of the disposal.
The VAT tribunal allowed the taxpayer's appeal concluding that there was no disposal of material "as waste" because those words connoted a disposal of material on the grounds that it was useless to anyone. Thus there was no disposal by the council to Recycling because the material was susceptible to recycling and there was no disposal by Recycling to the taxpayer because the material, having been recycled, was of use and value to both Recycling and the taxpayer. For those reasonsFinance Act 1996 section 40 subsec-or-para (2)s. 40(2)(a) was not satisfied and there could be no liability to landfill tax. Section 40(2) provided that there was a taxable disposal if (a) it was a disposal of material as waste, (b) it was made by way of landfill, (c) it was made at a landfill site and (d) it was made on or after 1 October 1996. With regard to the condition imposed byFinance Act 1996 section 40 subsec-or-para (2)s. 40(2)(b) the tribunal concluded that although the material was used by the taxpayer at its site for landscaping it had been disposed of by way of landfill because of the expanded definition of that term inFinance Act 1996 section 65 subsec-or-para (1)s. 65(1). The tribunal further held that the recycled material produced by Recycling differed from the material delivered to it by the council so that the relevant disposal of material for the purposes ofFinance Act 1996 section 40s. 40 was not made by the council. Customs appealed to the High Court arguing that the tribunal was wrong to find that there was no disposal by the council of material as waste having regard to the provisions of Finance Act 1996 section 64 subsec-or-para (1) section 64 subsec-or-para (2)ss. 64(1) and (2). The taxpayer argued on appeal that the tribunal was wrong to hold that there was a disposal by way of landfill and that the material disposed of by way of landfill had to be the same material as was disposed of as waste.
Held, allowing the appeal:
1. The relevant question was whether when delivering the material to Recycling's premises the council intended to discard it underFinance Act 1996 section 64 subsec-or-para (1)s. 64(1), that was cast it aside, reject or abandon it. That was a question of fact. The only inference which could be drawn from the facts as found by the tribunal was that the council intended to discard the material in question. It followed that all material delivered to Recycling whether by the council or others, was subject to a disposal of material as waste and all recycled material supplied by Recycling to the taxpayer and others was derived from that material.
2. The benefit to the council was irrelevant (Finance Act 1996 section 64 subsec-or-para (2)s. 64(2)) and whatever the original source of the material, whether it was delivered to Recycling by the council or a member of the public, it was the subject matter of a disposal as waste.
3. Any change in the material effected by the process of recycling did not result in either changing what was waste into something else or nullifying the effect of the disposals as waste by the council and members of the public to Recycling.
4. On a literal construction of Finance Act 1996 section 65 subsec-or-para (1)s. 65(1) there was a disposal by way of landfill. What had to be disposed of by way of landfill was not waste but material subject to a disposal as waste. It mattered not by whom the disposal was made. The disposal as waste might in accordance with the terms of the contract take place otherwise than at the landfill site. Those considerations indicated that the "disposal" for the purposes of the 1996 Act was more than the legal transaction by which it was effected or property in the material passed. Provided that the material could be identified as having been subject to a disposal as waste there was no basis on which it was possible to exclude material which was waste but had been recycled before a disposal by way of landfill.
Morritt V-C:
[1] This appeal from the determination of the VAT and Duties Tribunal (Mr JD Demack (chairman), Mr CBH Gill and Mr D Wenn) ("the tribunal") concerns the proper interpretation and application of Pt. III of theFinance Act 1996 by which a liability to landfill tax was imposed on landfill site operators in respect of the disposal of waste. The charge was introduced against the background of concern as to the disposal of waste demonstrated in Council Directive 75/442, theEnvironmental Protection Act 1990 and the White Paper entitled "Making Waste Work" (Cm 3040) presented to Parliament in 1995 by the Secretaries for State for the Environment and of Wales.
[2] The White Paper noted that landfill accounted for most (70 per cent) of the waste going to final disposal. It proclaimed the government's intention to reduce that proportion to 60 per cent by 2005 by the measures subsequently described. One of those measures was to promote the increase of recycling and reuse. Another was the introduction of a landfill tax. It described the central purpose of the landfill tax as to ensure that landfill costs reflect environmental impact. It was intended thereby to encourage 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. It was envisaged that the landfill tax would be passed on in full to waste producers, making them aware of the true costs of their activities and ensuring that, wherever practicable, polluters should pay for the costs they impose on the environment.
[3] By Finance Act 1996 section 39 section 40 subsec-or-para (1)s. 39 and s. 40(1) of the Finance Act 1996 landfill tax, under the care and management of the Commissioners of Customs and Excise ("the commissioners"), is charged on a taxable disposal. The person liable for the tax is the landfill site operator at the time of the disposal (Finance Act 1996 section 41s. 41).Finance Act 1996 section 42Section 42 prescribes the amount of the tax by reference to the weight of the amount disposed of.Finance Act 1996 section 43Sections 43-46 provide for certain exemptions. Finance Act 1996 section 47Sections 47-63 contain various administrative provisions.
[4] The provisions central to the problems which arise on this appeal are to be found in Finance Act 1996 section 40 subsec-or-para (2) section 64 section 65 subsec-or-para (1)ss. 40(2), 64 and 65(1). They are in the following terms:
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40 Charge to tax
(2) …
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