The government has backtracked on its plans to alter the rules surrounding the landfill communities fund (LCF), following complaints from landfill operators and environmental charities. The fund is financed by landfill operators; they are then allowed to claim back the money they donate to the fund as a tax credit that lessens their landfill tax liabilities. The money is used by environmental charities, such as local wildlife trusts or the RSPB, or by local community groups. For example, the RSPB website gives details of how LCF funding has benefited breeding lapwings on its Malltraeth Marsh reserve in Anglesey.
Originally, the government’s proposals were for environmental organisations to have to spend the money they had allocated to them in the fund within 18 months. The government was concerned about the amount of money lying unspent in the fund; the total was £130m in early 2014. The government put its proposals out to consultation, and the environmental organisations objected that 18 months was too short a time. They noted that complex projects could take far longer, and could also be delayed by many factors outside the control of the project manager. Thus the government has now decided not to implement this proposal. They are also no longer implementing a proposal for a licensing scheme for recipients to be run by ENTRUST (the LCF regulator), since they believe that this would create unnecessary paperwork. The government has also decided not to legally limit to 7.5% the amount the environmental bodies can spend on administration out of their LCF payments; instead, there will be voluntary guidance that this limit should be adhered to, with legislation only following if this does not happen in practice.
New Government Proposals on Landfill Communities Fund
The government has come out with new proposals to change the LCF, which have now gone out to consultation. Firstly, they are to prevent environmental bodies from using their funds to provide administrative services to other environmental bodies. Secondly, they plan to reduce the amount of record keeping associated with the fund; for example, records will now only need to be kept for six years. Thirdly, they will require landfill operators to provide additional funding (10% of their LCF donations) directly to the relevant projects. Currently, this extra 10% is usually paid by various third parties (known as ‘contributing third parties’), while the landfill operator pays 90%, but can claim this back against landfill tax. It seems that this external payment will no longer be permitted. Instead the landfill companies will have to bear the cost of this 10% gap. This proposal is likely to decrease the amount that landfill operators donate to the LCF, as they will now lose money on any donation.
Drop in maximum LCF contributions following Autumn Statement
Following the Autumn Statement, the maximum amount that operators can donate to the fund is being reduced from 5.7% to 4.2% of their landfill tax liability in April of this year. A total of £4m per annum over the next five years, taken directly from the landfill tax receipts, is being given to the Environment Agency, to help it deal with the escalating problem of waste crime.
HMRC website, ‘Reform and value of the Landfill Communities Fund’, 9th December 2015. https://www.gov.uk/government/publications/reform-and-value-of-the-landfill-communities-fund/reform-and-value-of-the-landfill-communities-fund
Francavilla, C., Endsreport website, ‘Government rows back on tightening landfill rules’, 30th November 2015. http://www.endsreport.com/article/50753/hmrc-rows-back-on-tightening-landfill-fund-rules
Entrust website, ‘Government publishes draft legislation for the Landfill Tax (Amendment) Regulations 2016’, 9th December 2015. http://www.entrust.org.uk/news/government-publishes-draft-legislation-for-the-landfill-tax-amendment-regul
RSPB website, ‘Lapwing numbers at record high on RSPB Malltraeth Marsh reserve!’ 19th February 2015. http://www.rspb.org.uk/news/392801-lapwing-numbers-at-record-high-on-rspb-malltraeth-marsh-reserve?utm_source=rss&utm_medium=feed&utm_campaign=News