Aggregates levy credit scheme
HMRC have confirmed that the aggregates levy credit scheme (ALCS) is to be suspended with effect from 1 December 2010. This decision will directly affect quarry operators in Northern Ireland who had been eligible for relief under this scheme.
The decision to suspend the ALCS in Northern Ireland stems from a recent EU General Court decision. This referred to action taken by the British Aggregates Association, which annulled the European Commission’s State aid approval of 2004 for the ALCS. It would therefore be unlawful for HMRC to continue to grant relief under the scheme as there has been no Commission decision to approve the aid.
Businesses using the scheme had benefited from an 80% relief in the amount paying an effective rate of £0.40 per tonne as opposed to the full rate of £2.00 per tonne.
HMRC and the Government had supported the scheme but continuing to grant aid increases the risk of the Commission taking recovery proceedings against those benefiting from the scheme. This could mean that operators using the ALCS would have to pay back aggregates levy of £1.60 per tonne incurred since the General Court decision on 9 September 2010 and potentially back to 2004.
The scheme is being suspended from 1 December 2010. This date was chosen as it achieves early compliance with the Court’s judgment while giving the industry fair and reasonable notice.