Tax calculation

1. Method of calculation
2. Determining the weight of the aggregate
3. Requirement to use a weighbridge
4. Alternative weighing methods
5. Mixing taxable aggregate with non-taxable material
6. Penalties
7. Water discounting
8. Record keeping requirement

Method of calculation

To determine the correct amount of Scottish Aggregates Tax (Scottish Aggregates Tax) due, you must accurately calculate the weight of taxable aggregate at the point of commercial exploitation. This chapter outlines the required methods for determining weight, including when a weighbridge must be used, permissible alternatives, and how to account for moisture content. 

The amount of tax charged on aggregate is calculated by multiplying the current rate of Scottish Aggregates Tax (SAT) by the weight in tonnes of the aggregate.

SAT rate x Weight of taxable aggregate in tonnes = Tax charged 

Determining the weight of the aggregate

The amount of Scottish Aggregates Tax due is based on the weight of aggregate that is commercially exploited. The weight must be measured at the point when commercial exploitation occurs. This point of measurement includes when aggregate is:

1. removed from an originating site, connected site or site where aggregate was due to be subjected to an excepted process, but this has not occurred
2. subject to an agreement to supply to any person
3. used for construction purposes
4. mixed with materials other than water, except in ‘Permitted Circumstances’

The weight must be determined in tonnes and, where possible, rounded down to two decimal places (e.g. 450.35 tonnes).

For more information on commercial exploitation please see this guidance.

Requirement to use a weighbridge

The standard method of weighing is by using a weighbridge that complies with the Weights and Measures Act 1985. Revenue Scotland would expect this to be used wherever practicable. However, where this is not practical or available, you must agree an alternative method with us. If you require an alternate weighing method, then you must agree this with us prior to your return being made otherwise you may be due to pay a penalty. Please see the Penalties Guidance for more information. 

If you are using a weighbridge to weigh aggregate, then the weight of the aggregate must be recorded at the first point of commercial exploitation.

Alternative weighing methods

Agreed method

If the use of a weighbridge is not possible, you must inform us as soon as is reasonably practicable and agree an alternative weighing method with us. You must contact us Link to agree this method prior to making your tax return. You can contact Revenue Scotland through the secure messaging service on your SETS account.

An alternative weighing method is a formal written agreement that sets out the method which the weight will be calculated and the time it must be calculated by. This agreement can be withdrawn by Revenue Scotland should it be deemed necessary, for example, because it does not give an accurate indication of the weight or the method is not being fully observed.

Such alternative methods might include:

1. calculations based on production rates and stockpile measurements
2. use of plant or vehicle load measurement systems 

In all cases the method must be agreed in writing with us. You must also keep supporting records to evidence calculations. These records must be made available to us when requested.

The agreed method must be applied consistently, and you must let us know if circumstances change. For example, an alternate weighing method may be in place while the site’s weighbridge is being repaired and that weighbridge has now been fixed.

Where you have an existing agreed alternative weighing method with HMRC, you will be required to submit a copy of the original evidence given to HMRC to substantiate the alternate percentage. Where this can be submitted, Revenue Scotland will initially accept the alternative weighing method. If this cannot be submitted, you must make a new application to Revenue Scotland prior to the submission of your first return.

Revenue Scotland will be reviewing all agreements in due course.

Specified weighing method

Revenue Scotland may publish alternative weighing methods in guidance. Methods published in this way are referred to as Specified Weighing Methods and carry force of law.

Specified Weighing methods would detail the method of weighing aggregate, as well as the time at which the weight of aggregate should be determined, the records required to kept to support the appropriate use of this method and any discounting of weights, such as water discounts.

Directed weighing method

If you fail to use a weighbridge when required, or no alternative method has been agreed, we may direct the weighing method you should use. This is referred to as a Directed Weighing Method and, if it is required, we will write to you with details.

We can also direct a specified method to be used where an alternative weighing method is not used in the agreed manner.

Mixing taxable aggregate with non-taxable material

If you mix taxable aggregate with other materials such as exempt aggregate, non-taxable material or already taxed aggregate then you must contact us to agree a weighing method.

For example, you may produce concrete, asphalt or a recycled blend that will require you to accurately identify the taxable aggregate contained within your product. In such circumstances you must write to us to agree your proposed weighing scheme. You can contact Revenue Scotland through the secure messaging service on your SETS account.

Penalties

Where aggregate is not weighed in accordance with the standard method, an alternative method agreed with Revenue Scotland, a specified or directed method directed by Revenue Scotland, any inaccuracies will be considered deliberate. If these inaccuracies mean that Scottish Aggregates Tax goes undeclared or unpaid, this may result in penalties based on deliberate behaviour.

A penalty may not be due where you have attempted to follow the correct procedure but have made a simple mistake.  The penalty is intended for occasions where a taxpayer has intentionally not followed the required procedure, for example, not using a weighbridge without having an alternative weighing agreement in place with Revenue Scotland.

Water discounting

Only water which has been added to the aggregate after it has been won can be discounted from tax calculations, this must be added for a specific treatment or process (such as dust dampening). Where this occurs, the weight used to calculate Scottish Aggregates Tax may be reduced to reflect only the weight of the aggregate itself. This is known as a water discount. 

Natural water content present in the aggregate, rainwater and groundwater do not qualify for any reduction when weighing aggregate.

In relation to Scottish Aggregates Tax, you can only agree water discounts with Revenue Scotland. If you have existing agreements for the UK Aggregates Levy with HMRC then these do not qualify for Scottish Aggregates Tax water discounting unless they have also been reviewed and agreed by Revenue Scotland. In these cases, you must let us know that you have an existing agreement with HMRC during registration. 

If you wish to arrange a water discount, please apply to us. 

If Revenue Scotland identifies that you have used inappropriate water discounting, then penalties may be applied.

Using a standard percentage to calculate the water discount

If you carry out washing of aggregate, we will allow you to use the following standard percentages in relation to washing aggregate as an alternative to determining your own specific percentage through weighing. Please note, you may not use a standard percentage in relation to dust dampening, only washing. 

The percentages are: 

1. 7% for sand
2. 4% for rock
3. 3.5% for gravel 

We may seek to review the use of standard percentages and, if any changes are to be made, amended guidance will be published.

Using a specified percentage to calculate the water discount

You may not wish to use the standard percentages set out above and instead utilise a more precise measurement for your water discount. If you wish to do this then you will be required to write to us with evidence that demonstrates the discount you wish to apply. We must agree this discount prior to it being valid for use. 

Where you have an existing agreed specified calculation for water discounting with HMRC, you will be required to submit a copy of the original evidence given to HMRC to substantiate the alternate percentage. Where this can be submitted, Revenue Scotland will initially accept the claimed discount percentage. If this cannot be submitted you must make a new application to Revenue Scotland prior to the submission of your first return or utilise a standard method until an application can be made.

Revenue Scotland will be reviewing all agreements in due course.

Record-keeping requirements

Weighing

All weighing methods have record-keeping requirements. Where a weighbridge is used, you must keep records of: 

1. the weighbridge used
2. the time and date of weighing
3. haulage slips or dispatch notes showing load weights
4. calibration 

Specified, agreed and directed weighing methods have their own record-keeping requirements which will be set out in guidance, the formal agreement or direction respectively. 

Water discounting

If you apply for a water discount you will be required to keep the following records: 

1. evidence of the moisture content (test results, lab reports, or meter readings)
2. details of the methodology used (e.g. sampling method, frequency)
3. any industry standards or reference materials used for bulk density or moisture estimation
4. the net weight after discounting, and the original weight from the weighbridge (if used) 

Records must be made available to Revenue Scotland on request and must be kept for a minimum of five years.