From 1 April 2018, to help combat the unauthorised dumping of waste, HMRC has extended landfill tax laws to fine any person or business found guilty of knowingly permitting the illegal disposal of said waste. This also applies to disposals made prior to 1 April 2018, which are still on the site post 1 April 2018.
Who is liable for landfill tax on a disposal at an unauthorised site?
When a taxable disposal at an unauthorised site has been identified, the following persons may be jointly and severally liable for the tax:
- the person who actually makes the disposal
- any person who knowingly causes or knowingly facilitates the disposal to be made
When determining the persons who may have knowingly caused or knowingly facilitated the disposal to be made, the following persons may be considered, but are not limited to:
- the waste broker or dealer involved in the disposal
- the waste haulier involved in the transport of the waste to the unauthorised site
- any company officer- a company officer has a different definition depending on whether it is an incorporated business or otherwise. For incorporated businesses this may include a director, manager, secretary, chief executive or a member of the committee of management, or a person purporting to act in such a capacity. For unincorporated associations, this may include an officer of the association, or a member of its governing body, or a person purporting to act in such capacity.
What does this mean for landowners?
A landowner will not be liable for tax if they can show they did not knowingly cause or knowingly permit a disposal at their property (an unauthorised site) where they take all reasonable steps to ensure that a disposal does not happen.
HMRC’s own guidance note states that a landowner would be expected to ensure that any lease or rental agreement states clearly what the premises or land may or may not be used for. This article does not address the legalities of what constitutes a reasonable step and we would recommend that landowners take their own legal advice, with particular consideration given to vacant properties. The insurance industry has witnessed a spate of incidents involving the fly tipping of waste within vacant out of town properties. Should the landowner become aware of waste being deposited at an unauthorised site they must report it to HMRC.
Tax liabilities arising from waste being unlawfully deposited are uninsurable; although it is possible to secure clean-up costs.
Typically commercial Real Estate material damage policy wordings will provide insurance protection to pay for the removal of unauthorised waste through a “fly tipping” extension. Standard policy limits are small; normally between £10,000 and £25,000, however we have been able to negotiate increased limits up to £100,000 for certain clients.
Where hazardous waste is involved this is still often not sufficient to fully protect a landowner. JLT is aware of a number of fly tipping claims for property owners where costs have extended well into six figures.
Environmental insurance may also be purchased, with protection achieved by endorsing the policy with an “Illicit Abandonment” extension. The limits available through the Environmental insurance market are much higher with limits of £5 to £10 million readily available. It is important to note that an Environmental insurance policy is only going to be triggered by a pollution release; i.e. a load of dumped tyres are just that, there is no pollution “escape” or release associated with them.
It is possible to include first party prevention expenses which will cover reasonable and necessary costs incurred as a result of an imminent threat of environmental damage or threat of a pollution release emanating from an insured location. An imminent threat is commonly defined as the reasonable likelihood that environmental damage or a pollution release will occur within 72 hours. Noting the aforementioned dumped tyre example; by virtue that there is no reasonable likelihood that a pollution release would occur within 72 hours there would be no insurance protection.
In conclusion insurance can provide some protection but appropriate security of premises is essential to mitigate a landowner’s exposure.
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For further information, please contact David Schofield, Senior Partner, Real Estate on +44 (0)20 7558 3357 or email firstname.lastname@example.org
This document is compiled for the benefit of clients and prospective clients of JLT Specialty Limited (“JLT”). It is not legal advice and is intended only to highlight general issues relating to its subject matter; it does not necessarily deal with every aspect of the topic. Views and opinions expressed in this document are those of JLT unless specifically stated otherwise. Whilst every effort has been made to ensure the accuracy of the content of this document, no JLT entity accepts any responsibility for any error, or omission or deficiency. If you intend to take any action or make any decision on the basis of the content of this document, you should first seek specific professional advice. The information contained within this document may not be reproduced and nothing herein shall be construed as conferring to you by implication or otherwise any licence or right to use any JLT intellectual property. If you are interested in utilising the services of JLT Speciality Limited you may be required by/under your local regulatory regime to utilise the services of a local insurance intermediary in your territory to export insurance and (re)insurance to us unless you have an exemption and should take advice in this regard.