Landfill Tax was devolved to Scotland from 1 April 2015. From this date Landfill Operators in Scotland can claim tax credits against their Scottish Landfill Tax liability in respect of qualifying contributions made to the Scottish Landfill Communities Fund (SLCF). A SLCF qualifying contribution must be attributable to SLfT payable on waste disposed of by way of landfill in Scotland. Landfill Operators will only be entitled to Scottish Landfill Tax credits in respect of qualifying contributions where they are paid to a registered Approved Body (AB). Organisations who wish to receive and distribute SLCF money, known as Approved Bodies, must first be approved by SEPA, the regulatory body for the SLCF. Regulation 29(1) of The Scottish Landfill Tax (Administration) Regulations 2015 sets out the criteria bodies must meet if they wish to be approved.
Environmental Bodies (EBs) operating as part of the UK Landfill Communities Fund (LCF) distribute project funds on behalf of landfill operators to projects across the UK. From 1 April 2015 EBs in Scotland registered with ENTRUST, the UK regulatory body, can continue during the transitional period (2015-17) to be registered with ENTRUST. During the transitional period EBs in Scotland may still hold unspent UK Landfill Community Fund (UK LCF) monies from contributions received from landfill operators located throughout the UK prior to the closure of the UK LCF in Scotland. From 1 April 2015 until 31 March 2017, these unspent monies can be spent on UK LCF compliant projects located throughout the UK, including Scotland. ENTRUST will remain the regulator for UK LCF monies being spent during the transitional period and any queries about the UK LCF should be directed to ENTRUST (www.entrust.org.uk).
Relevant dates
1 April 2015
Scottish Landfill Tax came into effect and the Scottish Landfill Communities Fund (SLCF) commenced in Scotland. Landfill Operators running sites in Scotland must register with Revenue Scotland to pay Revenue Scotland Scottish Landfill Tax. Once registered, Landfill Operators may claim credits against their Scottish Landfill Tax liability in respect of contributions made to the SLCF. Scottish Landfill Tax is payable (via quarterly tax returns to Revenue Scotland) on waste disposed of by way of landfill in Scotland on or after 1 April 2015.
1 April 2015 - 30 June 2015
Last opportunity for Environmental Bodies (EBs) in Scotland to receive LCF contributions from landfill operators (LOs) (dependent on the date that the contributing LO files its UK Landfill Tax return). These contributions must arise from waste disposed of by way of landfill anywhere in the UK on or before 31 March 2015.
1 April 2015 -31 March 2017
Transitional period in Scotland.
Receiving or spending old and new monies
Definitions:
Old monies – UK LCF contributions, paid to organisations registered with ENTRUST as an Environmental Body under the UK LCF, arising from disposal of waste by way of landfill anywhere in the UK on or before 31 March 2015.
New monies – UK LCF contributions, paid to organisations registered with ENTRUST as an Environmental Body under the UK LCF arising from disposal of waste by way of landfill in England, Wales and Northern Ireland on or after 1 April 2015.
SLCF monies – SLCF contributions, paid to organisations registered with SEPA as an Approved Body under the SLCF, arising from disposal of waste by way of landfill in Scotland on or after 1 April 2015.
Unspent monies - any old monies held by EBs which are not spent by 31 March 2017.
Monies received
- During the transitional period, EBs throughout the UK can receive transfers of old monies from any other EB in the UK. Please note that old monies cannot be transferred to ABs to be spent by the SLCF.
- EBs anywhere in the UK who will undertake projects in England, Wales and Northern Ireland may receive contributions or transfers of new monies. As above, old monies may not be transferred to ABs to be spent by the SLCF.
- Scottish landfill operators making contributions to EBs after 1 April 2015 cannot claim UK landfill tax credit in respect of those contributions unless the relevant disposal was made on or before 31 March 2015 and the claim for tax credit is set out in the 2014-15 final quarter UK Landfill Tax return.
- Scottish landfill operators making contributions to ABs (SLCF monies) on or after 1 April 2015 can claim tax credit via their Scottish Landfill Tax return, provided the relevant disposal was made on or after 1 April 2015.
Monies spent
- During the transitional period, all old monies held by EBs in any part of the UK can be spent on projects anywhere in the UK.
- All old monies held by EBs in Scotland must be spent or transferred to another EB (but not to an AB operating under SLCF) by 31 March 2017; unless that EB intends to undertake or fund projects in England, Wales or Northern Ireland from 1 April 2017 onwards.
- Any new monies held by EBs in any part of the UK from 1 April 2015 can only be spent on projects in England, Wales or Northern Ireland. Any SLCF monies can only be spent on projects in Scotland.
Unspent Monies
From 1 April 2017, if an EB in Scotland holds LCF old monies and will not be running LCF projects in England, Wales or Northern Ireland, the monies must be transferred to another EB. Otherwise HMRC will consider “clawback” of the relevant tax credit from the landfill operator which made the original contribution. In such cases it would be the responsibility of the landfill operator to reclaim their contribution from the EB.
Record keeping
- Organisations who are both an EB and an AB must check with the relevant landfill operator or transferring EB/AB as to the original source of any qualifying contribution or transfer received after 1 April 2015. They must keep records to show that they handle all contributions appropriately, bearing in mind whether they are new monies or SLCF monies.
- For audit and compliance purposes, organisations who are both an EB and an AB should keep records to evidence that they hold UK LCF and Scottish SLCF monies in different bank accounts from 1 April 2015 onwards. This only applies where the EB or AB is registered with both ENTRUST and SEPA.
EB/AB running costs
- During the transitional period, an EB holding UK LCF monies may meet the proportion of its running costs that is attributable to its UK LCF activities, from the UK LCF monies which it holds in accordance with the principles sets out in regulation 33(8), The Landfill Tax Regulations 1996 (S.I. 1996/1527), as amended.
- Where an EB has running costs which are incurred managing UK LCF projects in Scotland, only “old monies” may be used to meet these running costs.
- SLCF monies may be used to meet the running costs of an AB when those running costs are incurred managing SLCF projects in Scotland, provided they do not exceed 10 per cent of the funds applied, as set out in regulation 29 (12), The Scottish Landfill Tax (Administration) Regulations 2015.
Examples
1. As a Landfill Operator operating a site in Scotland, who can I pay contributions to?
You can only claim tax credit for SLCF contributions in your quarterly Scottish Landfill Tax returns for contributions made to Approved Bodies (registered with SEPA). Contributions paid by a registered Scottish Landfill Operator to the UK LCF, after 1 April 2015, via an EB (registered with ENTRUST) will not benefit from Scottish Landfill Tax credits.
2. My organisation has registered with SEPA in Scotland as an Approved Body but is also still registered with ENTRUST as an Environmental Body. It has no financial involvement/interest in any current or future LCF projects across the UK. Do I need to take any action?
Yes, once Environmental Bodies have completed their current Scottish projects under the UK LCF, they should seek voluntary revocation of their registration with ENTRUST. However, we would suggest that in the first instance they approach ENTRUST staff for guidance. Also, please note that any unspent monies may have to be transferred to ENTRUST or an agreed Environmental Body on or after 31 March 2017.
3. My organisation is registered with SEPA as an Approved Body and also with ENTRUST as an Environmental Body. In the past I have supported an environmental project in Newcastle, can I still do so?
Whilst you cannot support the project in Newcastle using SLCF monies, you may choose to continue your support using UK LCF funding where old or new monies are available. After 1 April 2015, if you receive qualifying contributions to the UK LCF from landfill operators in England and Wales then these contributions may only be spent on UK LCF projects outside Scotland.
4. I am a Landfill Operator in Cumbria accepting material to my landfill site from a waste producer in Dumfries and want to make a qualifying contribution to an Approved Body in Scotland.
The key point to consider when making a contribution and claiming credits is where the waste was landfilled, not where it originated. Disposal of waste at a landfill site outside Scotland does not create a Scottish Landfill Tax liability and such disposals are not eligible for SLfT tax credit.
You may however qualify for UK Landfill Tax credit if you make a contribution to the UK LCF and meet the requirements for such credits. You may choose to pay a contribution to an Approved Body in Scotland but you will not be able to claim any tax credit for this.
5. As an Environmental Body registered with ENTRUST and also an Approved Body registered with SEPA, what happens if I have not spent all the UK LCF monies by the end of the transitional period (1 April 2017). Can I use these monies to support projects in Scotland after that date?
No. After 1 April 2017 any unspent UK LCF monies cannot be spent on projects in Scotland. They must be spent on projects in the rest of the UK, or else transferred to another EB or back to the contributing landfill operator. Otherwise, HMRC may clawback the tax credit, in respect of any unspent monies, from the Landfill Operator which made the original contribution. It would then be the responsibility of the Landfill Operator to reclaim these monies from the Environmental Body.
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