After two consultation rounds with industry, the British government has decided that the Aggregates Levy exclusion will only apply when aggregate is returned to the land at the site where it was taken for a purpose connected to the winning of the aggregate.
The decision will restrict the exclusion to any aggregate used for operational purposes at a quarry, borrow pit or other extraction site.
Draft legislation to amend section 19(3)(e) of Finance Act 2001 will be published for consultation ahead of its inclusion in a future Finance Bill.
Robert McIlveen, MPA director of public affairs, said: "During the Review of the Aggregates Levy the issue of the unlevel playing field created by aggregate from borrow pits distorting local supply was one of a number of the main areas where MPA members told us they saw the rules being stretched significantly beyond the original intent with an impact on the market, so MPA pressed HMRC for action. We are pleased that HMRC has tightened the rules so that in future there will be a more level playing field."
Also commenting on the government's decision to adjust the implementation of the Aggregates Levy, Jayne Harrold, environmental tax leader at PwC, said: “Borrow pits are widely used on very large infrastructure and construction projects to reduce the transport of aggregate through local communities. The proposed removal of the aggregates levy exclusion for the use of these borrow pits will not add significant tax burden as aggregates levy is £2 per tonne, but it will result in significant new compliance and administration burdens for those affected.
“Aggregates Levy is a very complex tax. The proposed consultation on simplification by replacement of some exemptions with a single exemption for unavoidable byproducts of construction projects will hopefully ease administration and interpretation and result in fewer disputes with taxpayers.”
