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Landfill Tax Fraud
12 January 2023
Lead MP
Kevan Jones
Debate Type
General Debate
Tags
Crime & Law EnforcementTaxation
Other Contributors: 14
At a Glance
Kevan Jones raised concerns about landfill tax fraud in the House of Commons. A government minister responded. Other MPs also contributed.
How the Debate Unfolded
MPs spoke in turn to share their views and ask questions. Here's what each person said:
Lead Contributor
Opened the debate
Mr Jones highlighted the serious issue of landfill tax fraud, noting its impact on revenue collection and local communities. He discussed the introduction of landfill tax in 1996 with the aim to reduce waste going into landfills but pointed out that lack of regulation allowed criminals to exploit it. The Public Accounts Committee estimated the annual cost of landfill tax fraud and waste crime at around £1 billion, while stressing the environmental damage caused by unregulated sites. Mr Jones also mentioned Operation Nosedive as an example of HMRC's failure to secure successful prosecutions despite extensive investigations.
Jim Shannon
DUP
Strangford
Commended Kevan Jones for securing the debate and questioned whether legislative change is needed to ensure harsher penalties for those breaking the law in this area.
Noted that unfit individuals with criminal backgrounds can easily take over sites without scrutiny, highlighting Walleys Quarry in his constituency as an example of such issues.
Kerry McCarthy
Lab
Bristol East
Expressed concern about the prevalence of modern slavery and trafficking within the waste sector and its connection to criminal exploitation of landfill tax fraud.
David Davis
Con
Goole and Pocklington
Reinforces the points made by Kevan Jones about the Public Accounts Committee's estimate of near billion-pound cost to the Exchequer from waste crime each year. Emphasises HMRC's underestimation and highlights that £200 million in landfill tax was uncollected in 2019-20 alone, which is an underestimation even according to HMRC figures. Criticises HMRC for not wanting to make a big issue out of it while acknowledging the involvement of dangerous criminals who funnel money into criminal enterprises like drugs and prostitution. Raises concerns about waste crime blighting constituencies and highlights the failure of enforcement actions in addressing issues, emphasising the need for better cooperation between agencies rather than legislative changes. Discusses how illegal operators undercut legal ones by evading payment of landfill tax, impacting local environments negatively with no significant action being taken. Criticises Operation Nosedive’s failure due to lack of coordination among HMRC, Environment Agency and Crown Prosecution Service. Stresses the need for proper data collection, enforcement, and dedicated funding for joint waste crime units.
Liz Twist
Lab
Blaydon and Consett
The mismanagement of existing landfill sites has caused significant issues for communities in Blaydon. The Blaydon Quarry landfill site was a source of foul odours, litter, and dust before its closure in 2021, leading to extensive correspondence from concerned residents. Despite multiple enforcement notices and breaches of regulations, no prosecutions were made due to legal challenges. The issue also included the HMRC's Operation Nosedive, which failed to result in any prosecutions after six years despite an alleged fraud of £78 million. This failure cost taxpayers millions and raised questions about accountability. Liz Twist emphasised the need for decisive action by the Government to address waste crime, including landfill tax abuse, estimated at approximately £120 million annually.
Aaron Bell
Con
Newcastle-under-Lyme
The hon. Member for Newcastle-under-Lyme highlighted the severe impacts of waste crime and landfill tax fraud on his constituents, focusing particularly on Walleys Quarry in his constituency. He emphasised that misclassification of waste has led to significant health issues for residents due to odour problems. Bell criticised the failure of regulatory bodies such as the Environment Agency (EA) to adequately address these issues through enforcement and prosecution. He also noted the financial cost to the public purse, with a landfill tax gap of £125 million in 2020-21, reflecting an estimated billion-pound loss from waste crime overall. The MP called for more robust measures including stricter fines, longer prison terms, and better collaboration between HMRC and the EA to tackle waste crime effectively.
Daniel Zeichner
Lab
Cambridge
Congratulates the right hon. Members for North Durham and Haltemprice and Howden on their partnership, emphasises the persistence of my right hon. Friend in discussing this issue over time. Acknowledges the well-informed and passionate contributions from everyone who has spoken. Highlights the problems faced by constituents through Operation Nosedive and the shadow DEFRA team's awareness of Walleys Quarry saga. Criticises the consequences of cutting Environment Agency funding, stressing that enforcement on legislation is lacking. Emphasises the positive impact of landfill tax on reducing waste to landfills but notes the need for a robust regulatory framework. Cites statistics from ONS indicating a 65% reduction in recorded waste reaching landfills between 1997 and 2014, yet highlights piecemeal responses to changing circumstances. Mentions Environment Agency's estimation of over £900 million annual cost to the English economy due to waste crime and HMRC’s estimate of a £125 million tax gap for landfill tax in 2020-2021. Quoted a victim's traumatic experience with illegal dumping, emphasising the various methods used by criminals including misdescription of waste and abuse of exemptions to waste permits. Asks the Minister about plans to include other categories of tax fraud into future estimations of the landfill tax gap, recovery rates for due taxes, and specific revenue recovery figures. Criticises the current regulatory regime as close to decriminalisation with fines seen as business expenses for criminals. Requests actions taken by Government to address money laundering issues and publishes detailed investigation data. Urges a proper plan from relevant agencies to make enforcement more effective. Recommends that DEFRA works with Treasury and HMRC on reviewing landfill tax structure, addressing incentives created for waste crime. Concludes the need for Government action to tackle waste crime, reclaim revenues, support legitimate operators in the waste sector, and mitigate environmental damage.
James Cartlidge
Con
South Suffolk
The Minister acknowledged the importance of landfill tax in reducing waste to landfill but addressed concerns about non-compliance, enforcement difficulties, and environmental damage. He highlighted the success of the policy in achieving substantial reductions in landfill waste and emphasised ongoing efforts by HMRC and other agencies to tackle waste crime through civil and criminal measures.
David Linden
Lab
Glasgow East
Asked the Minister to call on Glasgow City Council to reject a planning application for a new landfill site, citing environmental concerns. The intervention highlighted the importance of moving towards recycling rather than increasing reliance on landfill.
Kevan Jones
Lab
North Durham
Expressed frustration over the lack of transparency and enforcement against waste crime despite known issues for years. Emphasised the need to quantify costs associated with non-compliance and questioned the effectiveness of current measures in place.
Liz Twist
Lab
Blaydon
Asked for more details on Operation Nosedive, expressing dissatisfaction over HMRC’s confidentiality stance. Highlighted concerns about the impact of waste crime on local communities and the importance of data transparency.
David Davis
Con
Haltemprice and Howden
Suggested that more could have been done by Operation Nosedive in terms of physical investigation. Emphasised the need for rigorous enforcement against waste crime to avoid environmental disasters.
Matt Rodda
Lab
Reading Central
Asked for quantification of fly-tipping costs and its impact on local authorities, residents, and businesses in Reading. Highlighted ongoing issues with fly-tipping and the need for more robust measures to address this.
Kevan Jones
Lab
Durham North
The Member acknowledges contributions from fellow MPs and expresses concern about the lack of confidence in HMRC's statement. He requests dedicated funding for the joint unit for waste crime and suggests using existing powers under the Proceeds of Crime Act 2002 to combat fraudulent activities. He highlights that criminality is being funded by these actions, leading to a loss of revenue and supporting illegal operations. Kevan Jones urges the Minister to have a meeting with his counterpart at DEFRA to co-ordinate on this matter, stressing the need for political leadership to move forward.
Government Response
The Minister responded by acknowledging concerns about landfill tax non-compliance and enforcement difficulties. He highlighted successful efforts in reducing waste to landfill, increased resources dedicated to landfill tax investigations, and ongoing work with various agencies to tackle waste crime.
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