Sudden tax hike threatens skip hire closures (From Sutton Guardian)

Sudden tax hike threatens Mitcham skip hire closures and fly-tipping

7:00am Thursday 31st May 2012 in News By Lauren May , Chief Reporter

Skip companies said they face financial ruin after a sudden rise in landfill tax, which the council fears could lead to more fly-tipping.

Last week the Government announced changes to its landfill tax from £2.50 a tonne to £64 a tonne, which will hit hard the many smaller skip companies based in Mitcham.

The 2,500 per cent price increase was introduced by Her Majesty’s Revenue and Customs (HMRC) with just one week’s notice.

Colette Jennings and her partner John Tapping, from Mitcham, set up Reliable Skips in 2007 but could now face bankruptcy when they have to dump waste from the skips they have already hired out at the previously lower prices.

Speaking on Thursday, Mrs Jennings, 46, said: “We are a small family-run skip company and have 60 to 70 skips placed around the area.

“We have not a hope of getting these skips back in at the prices that we have charged customers.

“Just at a time when everybody is battling and trying to keep their heads above water and trying to look forward – this has come along.

"The bottom is going to fall out of the industry and the only ones who are going to survive are the ones who have millions behind them.”

Stephen Alambritis, leader of Merton Council, warned the changes could lead to increased fly-tipping in the borough.

He said: “What this could do ultimately is close these very small skip hire companies.

“All the business will go to the bigger companies who are able to get these costs on board.

“It is ludicrous what is happening and it is going to bankrupt a lot of family-run companies.

“I’m doing all I can to galvanise the business community here in Merton so they write to as many MPs as possible.”

Siobhain McDonagh, MP for Mitcham and Morden, has also opposed the sudden increase and has called for a campaign protest meeting in Parliament later today, to which she has invited the Prime Minister, David Cameron and members of the public.

In a letter to MP David Gauke, Exchequer Secretary to the Treasury, Miss McDonagh said: “Irrespective of the merits or otherwise of the increase in charges that has resulted from the change in guidance, imposing the change overnight means there is no time for companies such as Reliable Skips to adjust their practices or alter the prices they charge their customers.”

Last week up to 50 skip lorries from companies across the south-east rallied in London to protest against the changes.

But David Palmer-Jones, chief executive at Sita UK, welcomed the changes as they addressed an anomaly on inert waste collected by skips, while other types of waste were already charged the higher rate.

He said: “This has been a grey area, which I know some companies have exploited to great commercial effect, but at the expense of the public purse and completely at odds with the spirit of the landfill tax regime.

“Environmentally the landfill tax is to help create a true circular economy and not, inadvertently or otherwise, to enable cheap landfilling.”

A spokesman for HMRC said: “HMRC responded to concerns expressed by landfill operators that some companies were not paying the right rate of tax and in the process disadvantaging those who paid the correct rate.

“We have addressed this anomaly by issuing fresh guidance to ensure a level playing field for all businesses working in landfill.”

UPDATE: 3pm May 31 - HRMC requested to amend their previous statement to read: “HMRC responded to concerns expressed by landfill operators that some companies were not paying the right rate of tax and in the process disadvantaging those who paid the correct rate. “We have addressed this by issuing guidance to remind them of the current rules and ensure a level playing field for all businesses working in landfill.”