Landfill tax irrecoverable

Posted: 24th September 2012

A tribunal ruling has emphasised the wisdom of seeking independent tax advice after a farmer who mistakenly paid more than £168,000 in Landfill Tax more than 15 years ago was refused his money back.

HoleThe tax was paid in 1996/97 after the farmer imported subsoil and topsoil to raise the base of a valley on his land. That was done under the terms of a permission which specifically excluded the use of waste, debris or rubble in the operation.

Before the First-Tier Tribunal, Her Majesty’s Revenue and Customs (HMRC) accepted on the basis of subsequent legal authority that the tax had not been due and had been paid under a mistake of law. The operation concerned was part of an agricultural land restoration project and had not been taxable.

In refusing to grant the farmer a refund of the mistakenly paid sum and interest - a total of £249,901.67 – the tribunal ruled that the money was not recoverable because a claim for repayment had not been made within the three-year time limit laid down by schedule 5 of the Finance Act 1996.

Arguments that the farmer had first intimated a claim for repayment by a letter he wrote to the tax authorities in May 1998 were rejected by the tribunal. There was also no entitlement to a tax credit for the overpaid sum as the tax had been paid in error and had not been due in the first instance.