Posted on: 21st Mar 2019
Defra update – The Waste Industry in a No-Deal Scenario
This week, in a meeting organised by Defra, Government officials and representatives of the HMRC met with exporters of waste to further discuss the effects of Brexit, whatever the outcome come 29th.
During the meeting, it was once again confirmed that there would be no impact on existing or new TFS applications, whether the UK leave the EU with or without a deal. But there would still be possible delays with regards to truck deliveries and hold-ups at port during any transition period following the Brexit decision.
After a presentation from the HMRC, what was highlighted, was the effect a possible no-deal result could have on the waste industry, from both a customs and VAT perspective.
Currently, due to the Basel Convention, the Environment Agency require written notification and consent of the movement of waste prior to it leaving a UK producer for export. The exporter needs to pay relevant fees and put financial guarantees in place, also obtaining all necessary permissions from the regularory authorities in all countries concernced.
If the UK leave with no-deal, there will be a requirement for additional Customs declaration of movement documents. This documentation would act similarly to that of EA notifications, and also travel from the UK waste producer through to the European EfW plant, cradle to grave, before being filed away. There will likely be an administration charge for said documents, exactly what this would be is currently unknown. But what we are sure of is it will be an additional burden on the industry.
This is comparable to how countries in the European Free Trade Association (EFTA), such as Norway, operate already today.
In addition to the extra documentation, if the UK leave with no-deal, there will also be a large financial impact on the waste industry. Again, similarly to countries in EFTA, who operate in the single market but not the customs union, EfW plants will be required to charge VAT on waste being imported from the UK. Although VAT is claimed back, it could make a considerable impact on cash flow of waste exporters businesses, if the reclaim period takes up to 9-12 months, as it does with Norway currently.
For Andusia this could amount to £2-3 million that would need to be reserved to cover the VAT charges from European plants, for the RDF industry as a whole it could mean up to £60 million awaiting European VAT refunds. Ultimately, a cost that would need to be bourne by the UK waste producers.
Tariffs on Logistics
In addition to this, under the World Trade Organisation (WTO), logistics services, in a no-deal scenario, would be faced with increased tariffs, believed to be up to 6.5%. Which again, would need to be passed down the chain, back to the UK waste producer.
Although the above is uncertain whilst the UK Government decide on the exact form of exit from the European Union, a no-deal Brexit would certainly impact on the waste industry. The table below summarises the possible scenarios and the effects that each would have.
It is Andusia’s view that RDF exports will continue to play a valuable, and crucial, role in diverting waste away from landfill for the foreseeable future, no matter what the Brexit result.
The UK still sends over 12m tonnes of waste to landfill but without further action, and as we begin to close landfill sites, we will find there is still 8.5m tonnes of non-recyclable waste without a home.
Andusia Director, Steve Burton, who attended the meeting, ends, “Whilst Defra seem to have done a very good job working with the European competent authorities, the same can’t be said for HMRC”