It Is What it Was – Judgement on Landfill Tax for Methane Producing Biodegradable Landfill

In the case of Patersons of Greenoakhill Limited v The Commissioners for Her Majesty’s Revenue & Customs the Court of Appeal has considered the landfill tax liability where biodegradable fill material produced methane used to generate electricity.

In her judgement Lady Justice Arden stated:

“This appeal is about the liability to landfill tax (“LT”) of a landfill site operator (“LSO”) where biodegradable material (material which decomposes through the action of microbes) is deposited at the landfill site, and produces methane which the LSO can extract and turn to account in making electricity. Normally, LSOs have to pay LT on any material which is disposed of “as waste” on their landfill site (Finance Act 1996 (“FA 96”), section 40(2)(a)). An LSO, however, which uses materials, rather than placing them into the landfill site as waste, is in general not liable to LT. This is because a person is treated as disposing of material as waste if, and only if, he disposes of it “with the intention of discarding the material” (FA 96, section 64). In HMRC v Waste Recycling Group Ltd (“WRG”) [2009] STC 200, this Court interpreted this provision so that waste does not include inert material received at a landfill site but used as a protective cover (“daily cover”) over the waste at the end of the working day, or for constructing roads on the site. This Court has not previously considered the situation where the material is not inert but biodegradable, and is not itself extracted from the site, but produces methane which can be removed.

2. In this case, the LSO, the appellant (“Patersons”), acquired both biodegradable and inert materials for landfilling at its site near Glasgow. It was obliged to remove the methane as a term of its licence and use it to create electricity. It now seeks a repayment of LT paid in respect of the biodegradable material for the three years (2006 to 2009) when biodegradable materials were deposited into the landfill site and produced methane. Patersons installed machinery which enabled it to convert that methane into electricity and sell it to the National Grid.”

“4. ……. The question whether Patersons disposed of the material as waste for the purposes of section 40(2)(a) must be decided at the date of deposit by reference to the material in the form
it then was. At that time, there was no methane. That came later. Therefore, I would dismiss this appeal.”

The other two justices concurred. The full judgement may be found here.