Source · Select Committees · Public Accounts Committee
Recommendation 16
16
Accepted
HMRC estimates that the amount of landfill tax due but not collected was £200 million...
Recommendation
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
Government Response Summary
The government agrees to ensure the current review of landfill tax takes account of the incentives that the tax as currently designed creates to commit waste crime. They will consider the structure of the tax and the impacts of any proposed changes to this on waste crime and on businesses, local authorities and individuals. They will continue to focus on using a suite of wider measures to tackle this issue.
Government Response
Accepted
HM Government
Accepted
3a. PAC 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. 3.1 The government agrees with the Committee’s recommendation Recommendation implemented 3.2 The government recognises that waste crime is an important issue. 3.3 The government set out in the Landfill Tax Review Call for Evidence published in November 2021 that as part of the review the government would consider the structure of the tax and the impacts of any proposed changes to this on waste crime and on businesses, local authorities and individuals. 3.4 Alongside considering waste crime impacts during the review the government will continue to focus on using a suite of wider measures to tackle this issue. 3.5 The department continues to collaborate closely with HM Treasury and HMRC on the Landfill Tax Review.