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Brief 41/14: Aggregates levy and Northern Ireland

This brief gives details about the introduction of an 80% aggregates levy credit for aggregate commercially exploited in NI following its importation from another European Union (EU) Member State.

The levy paid on this aggregate must have been accounted for at the full rate between 1 April 2004 and 30 November 2010 and the originating quarry in the other Member State must have met required environmental standards. This follows on from the European Commission’s investigation into the original Aggregates Levy Credit Scheme (ALCS) which provided an 80% levy credit to operators in NI who commercially exploited aggregate originating in the region, provided certain conditions were met.

That scheme was intended to help aggregates producers in NI cope with the very different market conditions (compared with those in Great Britain) as a result of being the only part of the UK to share a land boundary with another EU Member State.

In response to action taken by the British Aggregates Association, in 2010 the European General Court annulled the European Commission’s 2004 State aid approval for the ALCS. The scheme was therefore suspended from 1 December 2010 while the Commission undertook an investigation. This was outlined in Revenue and Customs Brief 42/10.

The Commission has completed its investigation and published its decision on 7 November 2014. The Commission is broadly content that the scheme complied with the prevailing rules but expressed concern that the tax benefit arising from the ALCS did not apply to aggregate commercially exploited in NI that originated in another EU Member State. The decision requires the UK to correct this distortion.

As a result, the UK will introduce legislation to provide for credits of aggregates levy for anyone that accounted for the levy at the full rate on aggregate commercially exploited in NI between 1 April 2004 and 30 November 2010 following importation of that aggregate from another EU Member State. The claimant must satisfy the DoE that it obtained the aggregate from a quarry that met specified environmental standards. If they do so, the claimant will be entitled to a credit of 80% of the tax paid (plus interest), bringing their tax liability into line with businesses in NI that participated in the ALCS.

More information is available in the Brief.