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June 5, 2012 - Bill Esterson's Westminster Diary

Bill Esterson

 

The skip tax may not have affected as many people as the granny tax or the pasty tax. It may not have had as much attention as the caravan tax or the charities tax. But for sheer incompetence it takes the biscuit. Chloe Smith, the Economic Secretary to the Treasury has written to MPs to “clarify” the situation regarding the skip tax. This follows uproar among skip hire firms, evidence of a sudden increase in flytipping and claims of skips not being collected because firms can’t afford the new charges for disposal of waste.

In case you missed it, according to the minister there was “recent clarification of guidance by HM Revenue and Customs (HMRC) in respect of landfill tax”.

What happened next is laughable as is the minister’s explanation. According to Ms Smith, “HMRC has acted to correct misinterpretation of the guidance which has led to increases in charges for use of waste transfer and landfill sites.” She goes on to say “some operators were misinterpreting the guidance as requiring significant tax increases. We acted to clarify the position.”

So there you have it. It was all the fault of the officials for giving unclear guidance. Then it became the fault of the landfill operators for increasing charges.

Landfill site operators collect the landfill tax at one of two levels. It’s £2.50 per tonne for less polluting waste and £64 per tonne for everything else. At a stroke skip firms were asked to pay the higher fee all over the country, threatening their business survival, threatening jobs and threatening a big rise in flytipping. It also threatened the livelihoods of people in the building trade who suddenly faced massive rises in their costs for hiring skips.

On May 18, the HMRC issued new guidance and that’s when the trouble started as charges shot up. You have to ask how this was all allowed to happen? Why did HMRC issue guidance that was so badly misinterpreted across the country? Didn’t they check first with landfill site operators? And why didn’t a government that prides itself on its relationship with business check with the business community or for that matter ask local councils? And why was a decision with such far reaching consequences made by officials without ministerial involvement?

I would certainly like to know what Treasury Ministers knew about the guidance and how it came to be issued.

At least 30,000 people are employed in skip hire firms. The reality is that the decision shows a government completely out of touch with reality and a government that really does not represent the small business community or the interests of the people who work for small businesses. This was yet another anti-growth move by the government and one which was starting to cause very real hardship for many people.

Whether this is another u-turn or not, it certainly adds to the list of unbelievable mistakes being made by this laughing stock of a government. I doubt we have heard the last of the skip tax just yet and my advice would be to check before your hire a skip in case the hire firm has “misinterpreted” the advice from the government. 

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