Upper Tribunal ruling on VAT and commercial waste collections

The Tax and Chancery Chamber of the Upper Tribunal has rejected a judicial review challenge brought by a private waste company over the VAT exemption enjoyed by councils on commercial waste collections.

The VAT exemption of commercial waste collection was introduced in 2011 on the basis that all waste collection authorities have a duty to arrange for the collection of commercial waste under Section 45(1) of the Environmental Protection Act 1990 (if requested to do so).

In The Durham Company Limited (t/a Max Recycle) v Revenue and Customs & Anor [2016[ UKUT 417 (TCC) (19 September 2016) Mr Justice Warren said: “The preliminary issue is to be answered in the sense that, where a local authority is making supplies of trade waste collection services to business customers in its area and does so in the performance of its duties under section 45(1)(b) EPA 1990, the supplies are “activities in which it is engaged as a public authority” within the meaning of Section 41A(a) the VAT Act 1994 and Article 13(1).'

The Local Government Association, an interested party in the case, has hailed the ruling, which it said would potentially save local authorities and small businesses “many millions of pounds”.