Upper Tribunal’s Tax and Chancery Chamber has declined a judicial review challenge submitted by a private waste company regarding the VAT exemption which councils enjoy on commercial waste collections.
The VAT exemption of commercial waste collection started in 2011 because every waste collection authority must regulate the collection of commercial waste if requested to do so, included in section 45 of the Environmental Protection Act 1990.
In Revenue and Customs &Anor v The Durham Company Limited, Mr Justice Warren said: ‘The preceding matter is to be acknowledged in the sense that, where a LA is offering supplies of trade waste acquisition services to business clients in its region and does so in the fulfilment of its duties under section 45(1)(b) EPA 1990, the supplies are “projects in which it is involved as a public authority” inside the purpose of section 41A(a) VATA 1994 and Chapter 13(1).
‘Whether an LA is really offering its commercial waste collection services included in section 45(1)(b) is an issue to be determined depending on the facts of every single case.’
‘The Local Government Association has hailed the verdict which, as believed, should save small companies and local authorities “many millions of pounds”.’
The LGA claims that if the verdict were different, it would lead to a decrease of council’s waste budgets for approximately £77m per year. Eventually, most would be under heavy pressure to include VAT into current charging levels.
Cllr Martin Tett, the LGA environment spokesperson, said:” This is great news and an important victory for councils and it will result in savings of many millions to them at these harsh times when a lot of local authorities have suffered substantial budget reductions.”
‘Councils plan to do everything in their power to support local companies and potentially absorbing the 20% extra would have greatly impacted the budgets, resulting in spending less on issues like caring for old people and fixing potholes.’
Furthermore, Cllr Tett added: “Local councils have managed to transform waste and recycling services during the last ten years increasing recycling from 23% to over 43% and reducing landfill by 62%. More than 8 in 10 of the public are content with the method their bins are collected are the results of the survey conducted by the LGA.”
“When it comes to waste services, there is no solution that would be fit for all, but to provide the best possible service for their residents, the councils will at all times work with householders when dealing with budgetary cuts.”