Recommendation 16

HMRC estimates that the amount of landfill tax due but not collected was £200 million in 2019–20. The Environmental Services Association told us that proportionally this is the second highest tax gap across all taxes, which HMRC agreed with.56 We heard from HMRC that this lost revenue comprises tax avoided through waste operators misdescribing waste so as to pay the lower rate, and tax that should be paid on waste that is illegally dumped. HMRC agreed that the true tax gap is higher because, for example, this estimate does not take into account fly-tipped waste, which is also in some cases a crime committed to avoid landfill tax.57 HMRC told us that it aims to promote landfill tax compliance and deter crime through working closely with landfill site operators to identify and rectify non-compliance, primarily through civil sanctions.58 But HMRC finds criminal investigations complex, time-consuming and difficult, and has to balance the potential benefits against the impact on other aspects of its work. HMRC has not yet completed a single successful prosecution for landfill tax evasion, currently having only one underway, and it was frank that it is still learning how best to investigate such crimes.59