Recommendation 3

Over recent years the landfill tax regime has successfully encouraged recycling but has increased the incentives to commit waste crime, and HMRC has been slow to prosecute offenders. Landfill tax, introduced in 1996, has driven down the amount of waste sent to landfill and increased recycling, but has increased the 6 Government actions to combat waste crime incentives to dispose of waste illegally to avoid paying the tax. Across all taxes, the gap between the amount of tax due and the amount collected is estimated to be proportionally one of the highest for landfill tax. HMRC works with landfill site operators to identify and rectify landfill tax non-compliance, primarily through civil sanctions, preventing significant losses. But HMRC finds criminal investigations difficult and time-consuming and has to balance the potential benefits against the impact on other aspects of its work. HMRC has not yet achieved a single successful prosecution for landfill tax evasion. The one investigation where it did try to prosecute the alleged offenders—Operation Nosedive—cost £3.5 million yet ended without going to court because evidential requirements were not met. HMRC was frank that it is still learning how best to investigate such crimes. HMRC is engaging with HM Treasury’s current review of landfill tax. Recommendation: Defra should work with HMT and HMRC to ensure the current review of landfill tax takes account of the incentives that the tax as currently designed creates to commit waste crime. HMRC should report by the end of the year on how it has improved its approach to landfill tax prosecutions.