EU decision in Aggregates Levy

We’re pleased to hear about the recent decision by the EU on the Aggregates Levy (AGL). Although it’s likely to be a while before the full extent of the decision is realised and the text is published, we’re sure that it marks a significant victory for the BAA, who have been fighting this cause single-handedly, and the likelihood is that this unfair tax may well be on its way out at last.

The European Commission has now decided that all but one of the exemptions, exclusions and tax reliefs from the Aggregates Levy introduced in 2002 are free of state aid.

The levy was brought in by the UK government to reduce environmental damage by encouraging the use of recycled aggregate and other alternatives to freshly extracted aggregate, and also to help promote the efficient extraction and use of aggregates, and it’s been levied on rock, sand and gravel on their first extraction as well as on processed products.

The BAA and many others believed that the levy was inherently unfair because some of the materials and production processes were given an exemption, simply because their aggregate is produced as a by-product or in some cases because their products can replace other freshly extracted aggregates.

The BAA has been trying to get the inequity in the AGL rectified for some time, without the backing of the Mineral Products Association (MPA). The debate about the legality of the tax under EU State Aid law has been going on April 2012, when the Commission ruled that “the planned exemptions involved no state aid within the meaning of EU rules because they were justified by the logic of the tax.”

The latest decision is helpful; but it also means that some of the businesses that have benefited from the exemption for shale and spoil for shale may potentially be facing very large bills, backdated to 2002, a ridiculous situation which could have been avoided if the government had accepted that the Aggregates Levy was flawed, something that the BAA has been pointing out to them since before 2002.

Robert Durward commented;
“We have always said that the eventual demise of the AGL could be messy and a number of our own members are also now at risk of having to repay shale exemptions.  However we have obtained legal advice on the matter and the association will support companies faced with draconian bills from HMRC.”

There will be another hearing in the Court of Appeal in November 2015 when BAA will once again challenge the 2002 judgment by Justice Moses that the Levy did not involve State aid. Although there’s clearly still a way to go, the BAA fully expects that this hearing will provide a further step in the right direction.