Balwin v Customs and Excise [2004] UKVAT(Landfill) L00022 (25 January 2005)

L00022
LANDFILL TAX — coal ash tip — contaminated land exemption —FA96 ss. 43A and 43B. — whether mere spreading out of contaminated material to produce suitable contour constitutes removal of  material from one part of land for disposal of another part to qualify for exemption — appeal dismissed

LANDFILL TAX —  coal ash tip — restoration exemption whether operations amount to restoration — FA96 s.43C — planning permission for depositing of inert construction waste material, drainage and restoration — whether planning requires restoration and nothing more — no evidence adduced of precise requirements — appeal dismissed.

MANCHESTER TRIBUNAL CENTRE

	STUART BALDWIN 	Appellant

	- and -

	THE COMMISSIONERS OF CUSTOMS AND EXCISE	Respondents

				Tribunal: 	David Demack (Chairman)
						Roger Freeston FRICS	
						
Sitting in public in Manchester on 8 December 2004
Mr R Legan of The Mineral Planning Group for the Appellant`

Mr Nigel Poole  of counsel instructed by the Solicitors office of HM Customs and Excise for the Respondents

	© CROWN COPYRIGHT 2005

DECISION
1.	The issue in this appeal is whether, as the appellant, Mr Stuart Baldwin, contends, deposits of waste on a former coal ash tip (“the tip”) qualify for exemption  from landfill tax as site restoration or, alternatively, as the disposal of contaminated waste.
2.	Mr Baldwin’s appeal is against two decisions on review of the Commissioners of Customs and Excise.  First, it is  against their refusal by letter of 16 January 2002 (confirmed on 30 January 2004) to accept that the exemption provided for site restoration applies to the tip.  Second, it is against their refusal by letter of 24 April 2003 to allow the exemption  for the disposal of contaminated waste. 
3.	The only evidence presented to us was a joint bundle of copy documents. From it we make the following findings of fact.
4.	Mr Barlow and his wife live at Landgate Farm, Bamfurlong, near Wigan.  The tip is on their farmland.  It is surrounded on three of its four sides by arable land, and on the fourth by houses.  In the 1950s and 1960s the tip, which covers 4.0016 hectares of land, was used by the local authority for the deposit of domestic ash and clinker.  It was apparently so used without planning permission.  When the tip was full, the authority failed to cap it, and simply abandoned it.  As a result, the tip remains an undulating area of exposed coal ash waste on which there are but nominal signs of re-vegetation.
5.	In 1998, Mrs Baldwin alone applied for planning permission to restore the tip to agricultural use. (Why she alone applied for planning permission and he alone dealt with exemption from landfill tax, when the tip is in their joint ownership, we were not told.  But whatever reasons, if any, there may have been for their decisions appear to be irrelevant).  The plan accompanying the application showed that the most northerly part of the site of the tip, amounting to about one fifth of its total area, was grassland, and the most southerly part, which was slightly smaller than the grassland, was “unused”.  By “unused” we take the plan to indicate that the area had not been used for tipping ash.
6.	Mrs Baldwin’s planning application was granted on 3 June 1998.  The permitted development  was described as, “Depositing of inert construction waste material (mainly clay and subsoil), ancillary drainage works and restoration so as to provide land fit for agricultural use.”.  The permission was expressed to incorporate the “requirements and conditions” contained in the “planning application form and associated Part 6 form”, the “supplementary information”, drawing no BGL/EB1, and a 1:500 plan showing proposed access to the site.
7.	The planning permission contained 19 conditions.  Numbers 8 and 10, which appeared under the heading “Working programme”, were in the following terms:
“8. Any topsoil and soil making material within the area of “grassland” shown on the “existing plan” (Drawing No. BGL/EB1) shall be stripped and stored separately within the site for use in the restoration of the site, before any waste material is deposited on the grassland area.”
“10. On completion of the depositing of waste material within each phase of the development such material shall be graded, having regard to the requirements of Condition No 17 and the levels shown on the Proposed Plan (BGL/EB1), so as to marry in to the surrounding ground levels and no part of the deposit shall have a slope steeper than 1 (vertical) in 5 (horizontal).  These works shall be undertaken before the commencement of the restoration as defined elsewhere in this permission.”
8.	And condition number 17, entitled “Restoration”, stated as follows: 
“17. Soil and soil making material shall provide the final 300 mm of cover over the remainder of the waste material.  The waste material shall be ripped to a depth of 300 mm and any stones or other objects with a maximum dimension of more than 200 mm shall be removed from the site or buried at a depth of at least 1 metre within the site.  Similarly, the soil/soil making material shall be ripped and stone picked so as to remove any stones or other objects with a maximum dimension of more than 150 mm which shall then be disposed of in a similar manner to those associated with the underlying waste material.  These works shall be completed within the timescale required by Condition No. 2.”
9.	We were not provided with a copy of the planning application or of the Part 6 form, so that, with one exception, we are unable to make any findings of fact in relation to the “requirements and conditions”. The exception is contained in a report to the Development Control Committee of Wigan Metropolitan Borough Council of 21 May 2002, which report dealt with an application by Mrs Baldwin to vary most of the conditions imposed in the planning permission of 29 September 1998 “so as to refer to inert restoration material rather than inert waste materials . . .”  The exceptional condition was explained in the report in the following terms:
	“The permission provides for the depositing of waste to a depth or thickness of about 2 metres incorporating a shallow (300 mm) layer of soil or soil making material as part of the restoration of the site.  It also requires an aftercare scheme for the land to be brought to a condition  fit for agricultural use”.  
10.	Since the exceptional condition was not a condition  of the planning permission itself, no reason was given for it. 
11.	(Whilst dealing with the report of 21 May 2002, we might also usefully mention that, although the application to vary the planning permission was refused on planning grounds, the Environment Agency had no objection to Mrs Baldwin’s proposals, nor had the Director of Environmental Health and Consumer Protection).
12.	The original planning permission was, however, later varied, and now requires the permitted development to be completed by 30 June 2007.  But it has not as yet been begun.  Indeed, if Mr Baldwin is required to pay landfill tax on the waste material to be deposited on the tip, it would appear unlikely that it will ever be carried out.  The tax in question  is not insignificant: on the documents before us it is estimated at £932,000.
13.	On 27 June 2001 Mr Baldwin was granted a waste management licence by the Environment Agency permitting the tipping of inert wastes “within the tipping area as defined on drawing number WDL/1 and section 1.1 of the working plan.”  We were not provided with a copy of the working plan, and the copy of drawing WDL/1 before us does not define the tipping area.
14.	At this point in our decision, we should mention that those representing Mr Baldwin prepared a statement of “common ground” for presentation at the hearing. On its being submitted to the Commissioners, they rejected it, concluding, “that it would be more appropriate for the facts of this case to be established by evidence adduced to the tribunal”.  Effectively they required Mr Baldwin to prove that the tip contained contaminants,  that it did not require capping, and that all material to be disposed of on it was to be used for restoration.  Unfortunately  his representatives failed to deal with the matter as required, with the result that we must reach our decision without evidence on all those very important matters.  
15.	In relation to the last of those requirements - that all material to be disposed of on the tip was for restoration purposes - Mr Baldwin’s representatives claimed that the root systems of grasses to be planted were much deeper than the 300 mm top layer required by the planning permission. In support, they submitted a 1926 paper on the “Root Development of Field Crops” by an American professor of plant ecology.  We were not taken to the paper (although it is the bundle before us) but observe that it relates to prairie grasses found in Nebraska and other states in America: such grasses are unlikely to be found on an ash tip in Wigan. A second paper, also produced, on the “Underground Organs of Herbage Grasses” from the University College of Wales, is undated, and we know nothing of any authority it is supposed to have.  In the circumstances, we are unable to attach any weight to either paper, and record that we ignore both of them.
16.	Against that factual background we turn to consider the statutory provisions in point in the appeal. They are all contained in the Finance Act 1996 as amended.  Tax is charged on a taxable disposal, defined in section 40(2) as “a disposal of material as waste made by landfill at a landfill site on or after 1 October 1996”.  By section 64(1), “A disposal of material is a disposal of it as waste if the person making the disposal does so with the intention of discarding the material”; and, by section 65(1), there is a disposal of material by way of landfill if it is deposited on the surface of land.  By section 66, land is a landfill site, inter alia, if a site licence for the purposes of Part II of the Environmental Protection Act 1990 is in force in relation to the land, and authorises disposals in or on the land.  It is common ground that the waste management licence held by Mr Baldwin is a site licence for the purposes of section 66.  Consequently, the tip is a landfill site.
17.	Sections  43A and 43B deal with contaminated land.  The parts of the former relevant in the present context are the following: 
 	“43A 	(1)  A disposal is not a taxable disposal for the purposes of this Part if it is a disposal within subsection (2) below.
		(2)  A disposal is within this subsection if  - 
(a)	it is of material all of which has been removed from land in relation to which a certificate issued under section 43B below as in force at the time of the disposal
(b)	none of that material has been removed from a part of the land in relation to which, as at the time of removal, the qualifying period has expired;
(c)	it is a disposal in relation to which any conditions to which the certificate was made subject are satisfied; and
(d)	it is not a disposal within subsection (4) below.”
(It is common ground that subsection (4) has no part to pay in this appeal).
	“(7)  	For the purposes of this section -
	(a) the removal of material includes its removal from one part of the land for disposal on another part of the same land.”
18.	By section 43B(1) the Commissioners are required to issue a contaminated land certificate where certain conditions are satisfied.  One such condition is that the reclamation  qualifies under subsection (7).  That subsection, and the related subsections (8) and (9), so far as relevant,  provide as follows:
(7)	A reclamation qualifies under this subsection if — 
(a)	it is, or is to be, carried out with the object of facilitating development, conservation, the provision of a public park or other amenity, or the use of the land for agriculture or forestry; or 
(b)	in a case other than one within paragraph (a) above, it is, or is to be, carried out with the object of reducing or removing the potential of pollutants to cause harm,
and, in either case, the conditions specified in subsection (8) below are satisfied. 
	
(8)   The conditions mentioned in subsection (7) above are— 
(a)	that the reclamation constitutes or includes cleaning the land of pollutants which are causing harm or have the potential for causing harm;
(b)	that, in a case within subsection (7)(a) above, those pollutants would (unless cleared) prevent the object concerned being fulfilled; and
(c)	that all relevant activities have ceased or have ceased to give rise to any pollutants in relation to that land.

(9)   For the purposes of subsection (8) above the clearing of pollutants—
(a)	need not be such that all pollutants are removed;
(b)	need not be such that pollutants are removed from every part of the land in which they are present;
(c)	may involve their being cleared from one part of the land and disposed of on another part of the same land

19.	Mr Baldwin relies on section 43B(9) for his claim to be entitled to the contaminated land exemption.  That subsection must be read with subsections (7) and (8) of section 43B. Reading the three subsections together, as they could apply in the instant case, they provide that a disposal shall not be taxable if the Commissioners have issued a contaminated land certificate under section 43B(7) to a person intending to carry out a reclamation of land with the object of facilitating development; the reclamation constitutes or includes clearing the land of pollutants either causing harm or having the potential to do so; and for that purpose the clearing of pollutants “may involve their being cleared from one part of the land and disposed of on another part of the same land.”
20.	Mr Legan, Mr Baldwin’s representative, submitted that the removal of material for the purposes of section 43B(9) includes its removal from one part of the land for disposal on to another part of the same land, and that the clearing of pollutants includes their being cleared from one part of the land for disposal on to another part of the same land; there is no requirement to remove pollutants from the land.  The object is to deal with the pollution by preventing the penetration of grass roots to the underlying pollutants, and thereby make the land fit for agricultural use.
21.	Mr Poole, counsel for the Commissioners, in responding, pointed out that if we were to accept Mr Legan’s submissions the mere spreading out of contaminated material on land would create an exemption from landfill tax for that material; and that could not possibly have been the legislative intent.
22.	The Commissioners  are required to issue a contaminated land certificate in relation  to any land where, provided other conditions are met, the reclamation qualifies under section 43B(7).  Mr Baldwin’s ultimate aim is to use the land for agriculture, but, in our judgment, he does not meet the statutory conditions in section 43(B)(8) because the reclamation does not constitute or include clearing the land of pollutants.  Spreading out the pollutants on the land for the purpose of producing a suitable contour, which is what is intended here, is not the same as clearing them from one part of the land and disposing of them on another part of the same land.  We so hold, and in doing so accept Mr Poole’s submissions on the point.  We conclude that Mr Baldwin does not qualify for the contaminated land exemption.
23.	We then turn to deal with Mr Baldwin’s claim to be entitled to the site restoration exemption from tax.  It is dealt with in Section 43C.  In its entirety, the section provides:
	“ (1)	A disposal is not a taxable disposal for the purposes of this Part if –
(a)	the disposal is of material all of which is treated for the purposes of section 42 above as qualifying material,
(b)	before the disposal the operator of the landfill site notifies the Commissioners in writing that he is commencing the restoration of all or part of the site and provides such other written information  as the Commissioners may require generally or in the particular case, and
(c)	the material is deposited and used in the restoration of the site or part specified in the notification under paragraph (b) above.
(2)	In this section “restoration” means work, other than capping waste, which is required by a relevant instrument to be carried out to restore a landfill site to use on completion of  waste disposal operations.
(3)	The following are relevant instruments –
(a)	a planning consent;
(b)	a waste management licence;
(c)	resolution authorising the disposal of waste on or in land.”
24.	Mr Legan maintained that Mr Baldwin had met all the conditions in section 43C.  He particularly contended that restoration of the tip did not require any engineering operations; that imported inert materials would be tipped in a single layer; and that the site did not need primary or secondary liner, or need capping.  As to paragraph 3.6 of the Commissioners’ notice LFTI, which states, “Capping normally refers to the engineered layer used to stop ingress of water into the finished landfill, which may be constructed to engineering standards using, for example, imported clay”, Mr Legan observed that capping was not a requirement of the planning permission  or of the site licence, nor, he submitted, was it necessary in this case.  No evidence was adduced to deal with any of Mr Legan’s various claims, and without it we are unable to accept any them.
25.	Mr Legan then dealt with the “drainage” requirement of the planning permission. He explained that a site intended to take household, chemical or toxic wastes required an elaborate highly engineered drainage system comprising a peripheral drain with feeders from within the site in order to ensure that leachates were collected and dealt with effectively.  He claimed that the only drainage involved in Mr Baldwin’s proposal was that necessary to ensure that there was no surface ponding when restoration was complete, and that would be achieved either by the combination of materials used in restoration or by the laying of simple field drains, neither of which was an engineering operation.  But, once more, the claim was unsupported by evidence, so that again we are unable to accept it. 
26.	The Commissioners’ refusal to accept that restoration exemption was appropriate, in Mr Legan’s submission, placed undue weight on the precise terms of the planning permission, the sole object of which was “to provide land fit for agricultural use”.  He maintained that section 43C was intended  to cover situations such as Mr Baldwin’s, and observed that, without the inducement of tax exemption, abandoned tips requiring reclamation would remain unrestored and useless in the long term.   Mr Legan further submitted that “restoration”, used in a planning context, invariably referred to the final phases of a restoration scheme, involving the placing of subsoils and topsoils on land in order to promote plant growth.  Under no circumstances, he continued, would the term, used in a planning condition, embrace the disposal of the wide range of “qualifying materials” falling within the definition of “restoration” under the 1996 Act.  Yet again, had evidence dealing with those matters been adduced, we might have been able  to accept it: without it, we cannot.
27.	Finally, Mr Legan submitted that the instant case was distinguishable on its facts from that of Ebbcliff Ltd v CCE [2004] EWCA CIV 1071, in that in Mr Baldwin’s case no filling or capping is required.  In Ebbcliff, the Court of Appeal confirmed that section 43C was of general application applying to a landfill site in respect of which there was an extant licence pursuant to which there were ongoing operations: the section recognised that there was a stage in the proceedings when “restoration” was commenced, and exemption was conferred on disposals of waste deposited on and used in the restoration of the site.  The Court defined “restoration” as work of a particular kind, namely, work (other than capping waste) which was required by the relevant instrument to be carried out to restore a landfill site to use on completion of waste disposal operations: the wording of section 43C(2) supported the notice of continuing process from operational use for landfill to remedial work to restoration for use.
28.	 Ebbcliff may be so distinguishable;  so too may the two tribunal cases of Harley v CCE (2001) Decision No L13 and Dispit Ltd v CCE (2003) Decision No L.    referred to in the judgments in that case.  (Ebbcliff involved the re-opening of an old quarry on a 94 acre site “for the deposit of inert material so that the ground surface [containing toxic waste] could be adequately covered”; Harley was concerned with the filling of “a secondary valley at the base of a wider dry valley”; and Dispit related to the filling of a railway cutting “between 3 and 4 kilometres in length but only 55 metres wide”). Whereas in each of those three cases,  infilling of land, involving the disposal of quite considerable quantities of material, was required prior to capping and restoration, here, if the case advanced for Mr Baldwin is correct, the only work needed is restoration, and some associated drainage work.   But yet again, the evidence  needed to substantiate the claims is lacking.
29.	The burden of proving that Mr Baldwin is entitled to the site restoration exemption lies on him. He has failed to discharge it.  We therefore have no alternative but to dismiss his appeal against the Commissioners’ refusal to accept that he qualifies for the restoration exemption
30.	As Mr Baldwin’s claim to be entitled to the restoration exemption might, properly presented, have had prospects of success, so that he may consider it worthwhile further pursuing the matter, by, for example, depositing some waste, waiting for the consequent assessment, and then bringing a further appeal, it may be helpful to him if we summarise the Commissioners’ case on that aspect of his appeal.
31.	Mr Poole submitted that the planning permission granted to Mrs Baldwin was not irrelevant, as Mr Legan had argued; it was the restoration required by that permission that attracted exemption from the tax.  He further submitted that the planning permission covered various stages of works of which restoration was the last-see particularly conditions 10 and 17: the depositing of waste material was not part of the restoration required by the permission.
32.	Of Mr Legan’s contention that the depositing of waste material was part of the restoration, Mr Poole maintained that such a wide interpretation would allow any  disposal of waste at a landfill site to be exempt if restoration of the site was the ultimate aim.  He contended that section 43C envisaged two distinct stages: waste disposal followed by restoration.
33.	Mr Poole indicated that the Commissioners’ would make no application for costs in the event of the appeal being dismissed, and we therefore make no direction in that behalf.

DAVID DEMACK
CHAIRMAN
RELEASE DATE: 25 January 2005

MAN/03/9502