Fife Council arms length firm loses court bid to claim £57,000 from scrap merchant

Fife Resource Solutions (FRS) had a contract with Robertson Metals Recycling Limited whereby the firm would send its waste to the Lochhead landfill site in Dunfermline for disposal.

However, the deal soured when FRS miscalculated the amount of landfill tax due on 7,000 tonnes of "fines", the remnants left over from recycling activity, in 2015.

Robertson described the material as "stone and concrete", liable for a lower rate of Scottish landfill tax. However, when environmental body SEPA carried out an audit of the waste and calculated that it was liable for a higher rate of tax FRS sought the costs from Robertson, totalling £57,443.

At the Outer House of the Court of Session, representatives for FRS argued that under Section 27 of the Landfill Tax (Scotland) Act 2014 the arms-length body had the right to amend the amount owed to it following a recalculation of any taxes.

They said it would have been "impractical and contrary to commercial common sense" to have tested every piece of waste Robertson sent to them to ensure they were liable for the lower rate of tax and could not be held responsible.

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However, Lord Tyre dismissed the case because the law applies to the legally recognised operator of a landfill site.

FRS was set up by Fife Council to operate the Kingdom's waste and recycling services as well as to provide services to external bodies, but is legally distinct from the local authority.

While Fife Resource Solutions carries out work at Lochhead, the judge ruled, the Act recognised Fife Council as the operator of the site by law and is, therefore, liable for paying the landfill tax rather than FRS.

He noted that FRS collected payments from contractors to pay the landfill tax, but the actual payment of the tax to Revenue Scotland was made by Fife Council, and it was the council that the law applied to, giving no protection to arms-length bodies.

It was FRS's responsibility as the contract holder to ensure that the right amounts were being charged to Robertson so the correct tax could then be passed onto the council. Any errors in the amount owed were not, he ruled, covered in this case by the Landfill Tax Act.

In his judgment, Lord Tyre wrote: "The fact that the error was discovered and additional tax has had to be paid does not, in my view, constitute a change in the tax chargeable.

"It is not the function of the taxing statute to rewrite the parties’ contract."

He reserved the matter of expenses for a further hearing. FRS can appeal the ruling.

In response to a request for comment Robin Baird, chief operating officer of Fife Resource Solutions, confirmed he was aware of the Court of Session ruling, adding that the firm was now considering its next steps.

Robertson Metal Recycling was contacted for comment.

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