HMRC clarifies position on Aggregates Levy

Revenue & Customs issues Brief on European General Court judgment and non-payment of the levy

EARLIER this week HM Revenue & Customs (HMRC) issued Brief 21/12 providing details about the implications for the Aggregates Levy following the March 2012 judgment of the European Court in the case of the British Aggregates Association (BAA) vs the European Commission.

In 2002 the BAA submitted views to the European Commission which challenged the introduction of the Aggregates Levy by claiming that it contained unapproved and unallowable State aid.

However, the Commission decided not to object to the levy, concluding that it did not contain any State aid other than the credit scheme in Northern Ireland, which it considered to be compatible with the common market.

The BAA then brought an action in the European Courts for partial annulment of the European Commission’s decision and, on 7 March 2012, the European General Court ruled that the Commission’s original consideration of whether the levy contains State aid was flawed, and annulled the Commission’s decision.

The Commission has decided not to appeal this judgment and will now have to reassess whether the levy contains any State aid and, if so, whether it is compatible with the Commission’s guidelines.

In the meantime, HMRC says the judgment does not render the levy illegal, as it did no more than annul the European Commission’s State aid assessment.

Although the levy remains under challenge in the UK Court of Appeal, its legal basis was confirmed by a High Court Order made in 2002. Accordingly, HMRC says it will continue to administer and collect the tax as normal, and there is no change to registered businesses’ legal responsibility to pay the levy.

It adds that where registered persons withhold payment of the levy declared as due on their returns, late/non-payment penalties and penalty interest may become due.