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Judicial review case begins to decide waste VAT issue

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High Court hears judicial review case concerning council’s VAT waste collection exemption

Proceedings have begin in the London’s Royal Courts of Justice to decide if local authorities in England should be allowed to continue commercial waste collection services without charging VAT.

The case against HM Revenue & Customs (HMRC) was initiated by a north-east waste management company which argues that HMRC’s 2011 council VAT exemption policy gives local authorities the upper hand in the commercial waste collection sector.

Royal Courts of Justice to hear council waste collection VAT case

The Royal Courts of Justice in London

In 2011, HMRC decided that councils across England should not be forced to charge VAT on its commercial waste services, as offering such a service was required of councils under the Environmental Protection Act 1990.

However, the private waste firm at the centre of the case, and many fellow independent waste service providers, believe that allowing councils to operate waste collections with a VAT exemption is anti-competitive and results in an ‘uneven playing field’, with private businesses losing out.

An Upper Tax Tribunal case has therefore been brought against HMRC. The first hearing took place on Monday, July 19, in the High Court in London, with HMRC arguing that there is a ‘special legal regime’ to justify the exemption.

The case could last for months before a decision is made, but the Local Government Association (LGA) said that a ruling against HMRC could result in losses of ‘millions of pounds’ for councils.

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