Jonathan Nuttall v The Commissioners for HMRC

This is an appeal by North Killingholme Storage Limited (“NKSL”) and its sole director Mr Jonathan Nuttall against final decision letters and notices of assessment for landfill tax under section 50A of the Finance Act 1996 (“FA 1996”) and an interest charge under paragraph 27 of Schedule 5 to FA 1996 (the “Decisions”) issued by HMRC on 20 September 2022.

The Decisions relate to about 7,686 tonnes of refuse derived fuel (“RDF”) that was bagged and stored on NKSL’s land, pursuant to an agreement, of 28 June 2011, between NKSL and SRF Processors (UK) Limited (“SRF”). SRF is an associated company of the Asset and Land Group Limited (“ALG”).

The keeping of the RDF on the land was permitted by a licence from the Environment Agency. The licence was originally granted to NKSL on 22 January 2004, but was transferred to North Killingholme Recycling Limited (“NKRL”) on 13 July 2012. Mr Nuttall was also a director of NKRL. The licence was automatically revoked on 28 September 2017, when NKRL was dissolved.

The sole issue in dispute between the parties is whether, on the specific facts of this case, there was a “disposal” (for the purpose of s 40 FA 1996) on 28 September 2017, when NKRL was dissolved and the licence revoked.

It is common ground that if there was a disposal it was not at a landfill site but would require a permit or licence. Accordingly, s 40(2)(b) FA 1996 is the relevant charging provision. HMRC say NKSL and Mr Nuttall are jointly liable. HMRC say that NKSL are liable because they knowingly caused or knowingly permitted the disposal to be made: s 41(3)(b) FA 1996. It is not HMRC’s case that NKSL made the disposal. HMRC say that the disposal was by NKRL. HMRC say Mr Nuttall is liable as he was a director of NKSL: s 41(7)(c) FA 1996.

The sums in dispute are £751,316.17 of LFT and compound interest of £587,989.76 for the period 1 April 2018 to 19 September 2022, although it is agreed between the parties following the provision of evidence of the actual weight of the RDF that the calculation should be varied to take account of a reduced weight of material.

The structure of the decision is as follows. It first sets out the statutory framework governing landfill tax, including both the current and former versions of the legislation. It then summarises the relevant case law. The decision then makes detailed findings of fact concerning the storage of the RDF, the involvement of the various companies, and the events leading to the dissolution of North Killingholme Recycling Limited. The decision next outlines the parties’ respective arguments and proceeds to analyse whether a “disposal” occurred on 28 September 2017, within the meaning of FA 1996, as amended.

At all relevant times the relevant legislation was as follows:

Schedule 12 to FA 2018 amended Part III of FA 1996, resulting in the provisions set out above. Additionally, paragraph 31 of Schedule 12 to FA 2018 provides as follows:

It is common ground that the effect of this is that where a disposal has taken place other than at a landfill site before 1 April 2018, then the disposal is deemed to take place on 1 April 2018.

These provisions were significantly different in FA 1996 as originally enacted, most notably it only provided for the taxation of disposals made at a landfill site (and so excluded disposals at sites, such as that in the instant case, that are not landfill sites). Also the legislation as originally enacted expressly required an “intention of discarding the material” by the person making the disposal: s 64(1).

It is necessary to set out certain parts of FA 1996 as originally enacted, both to understand certain arguments of the parties and to contextualise the case law (all based on the earlier provisions) that was cited to us:

With regard to the purpose of FA 1996, as originally enacted, the Appellants referred us to Parkwood Landfill v Commissioners [2002] EWCA Civ 1707; [2002] STC 1536 (“Parkwood”), where Aldous LJ observed:

We were also referred to the explanatory notes to the Bill which became Finance Act 1998 which in turn amended FA 1996 which state:

Several cases were cited before us. It was common ground between the parties that these cases do not bind us, because they relate to either earlier versions of the statute or different statutes.

We have found little assistance from those cases for precisely that reason. However, we wholeheartedly agree with the approach of Rose LJ (as Her Ladyship then was) in Devon Waste Management v HMRC; Biffa Waste Services Limited v HMRC [2021] EWCA Civ 584; [2021] STC 990 (“Biffa Waste”) at [60] who observed that:

The task before the Tribunal in this case is to consider “disposal” in the context of the amended version of FA 1996. It is therefore at best a distraction to consider earlier cases that considered an earlier version of a statute that required the “intention of discarding the material”. The context of that earlier statute was different, as it applied only to landfill sites. At the hearing we also raised the question as to whether the meaning of “disposal” in other tax legislation (such as that relating to chargeable gains) was relevant. However, for the same reason we regard it as a distraction from the task of construing the relevant legislation, due to the contextual differences.

However, as the parties took some time in taking us through various earlier cases we consider relevant passages from these cases below.

The Appellants drew our attention to HMRC v Waste Recycling Group Ltd [2008] EWCA Civ 849; [2009] STC 200 in which Sir Andrew Morritt C. observed at [33] that:

However we find that of little assistance as it considers the meaning of the word “discard” rather than “dispose”.

We were referred to Berkshire Council v Scott [1993] 3 All ER 113 in which Watkins LJ considered the meaning of “disposing of controlled waste” in s 3(1) of the Control of Pollution Act 1974 where he stated at 121b:

With respect, we find no assistance in this passage as it concerns a different statute which uses different language (“deposit”, not “disposal”).

In Excise Commissioners v Darfish Limited [2002] BTC 8003 Moses J observed:

With respect we take limited guidance from this passage. This is because FA 1996, as originally enacted, referred to “deposited on the surface of land” and “deposited under the surface” when defining disposal by way of landfill: s 65(1). In contrast the relevant provisions of the amended version of FA 1996 that applies in this case refers to “disposed” rather than “deposited” in the equivalent provision: s 40A(1).

We were referred to Middleton v Wiggin [1996] LRLR 129 (CA), which concerned an explosion caused by landfill gas that migrated from a landfill site into a nearby house. The issue was not liability to the injured claimants, but whether the landfill operator’s public liability insurers were obliged to indemnify the operator. This hinged on the interpretation of an endorsement in the insurance policy that referred to the “disposal of waste materials”. Hutchinson LJ observed:

While we agree “putting away, getting rid of, or definitely dealing with” is a useful summary of the ordinary meaning of disposal, we consider the correct approach to statutory interpretation is to test the facts against the word Parliament has chosen, rather than seek to substitute in words that have a similar meaning, consistent with Rose LJ’s observations in Biffa Waste. It is an everyday word which does not in our view need to be glossed.

We have had regard to a hearing bundle of 889 pages and an authorities bundle of 278 pages.

We heard live witness evidence from Officer Robert Illingworth. We found him to be a straightforward witness who truthfully answered the questions put to him, even when the answers were disadvantageous to HMRC’s case – such as his answer that HMRC would not have issued the assessment if a new licence had been obtained within six months.

Mr Nuttall also attended to give evidence, but HMRC indicated that they had no questions for him. We therefore accept, as unchallenged, the evidence in his two witness statements.

On 8 January 2010, NKSL entered into a fifteen‑year lease of the former airfield site at Lancaster Approach, North Killingholme, with an obligation to yield up with vacant possession and remove all tenant’s fixtures and fittings on expiry in January 2025.

In the first half of 2011, ALG approached NKSL to procure storage for RDF pending export for use in combined heat and power plants in continental Europe. Because such plants consumed more RDF in winter than in summer, ALG explained storage was required prior to export. In these discussions ALG was represented by Mark Pinckney and Barry Kilroe, the Managing Director of ALG.

On 28 June 2011, NKSL and SRF entered into a transport and storage agreement on UKWA terms for the temporary storage of RDF. The agreement incorporated the United Kingdom Warehousing Association (“UKWA”) terms and conditions. The UKWA terms and conditions include a customer undertaking that:

The UKWA terms and conditions also include the following under the heading “Termination”:

On 29 June 2011, Barry Kilroe provided a personal guarantee in respect of the RDF.

On 22 January 2004, the Environment Agency had granted NKSL a waste management licence authorising the keeping and treatment of controlled waste at the North Killingholme site. In July 2011, the Environment Agency varied the licence to permit storage of the RDF that was later deposited at the site.

The licence required that:

From late June 2011 to June 2012, SRF delivered RDF into a fenced compound on the site. The RDF was stored in sealed plastic bales, piled up to 7 tiers high. Photographs of the baled RDF are included in the Appendix to this decision.

In January 2012, the Environment Agency started raising concerns about the growing stockpile of RDF stored at the site. These were recorded in various correspondence, including letters dated 31 January 2012 and 13 June 2012, and discussed at meetings between NKSL, ALG and the Environment Agency on 20 June and 25 September 2012. At those meetings, ALG confirmed to the Environment Agency that they were taking steps to remove the Material from the site and were considering destinations and contracts for its onward processing. The Environment Agency asked to see concrete plans for the removal of the RDF and noted that the process would need to be managed carefully and that steps would need to be taken to reduce the stockpile at the site with a view to removing it altogether.

In parallel to those discussions, NKSL also entered into separate discussions and correspondence with ALG to ascertain the steps that would be taken to remove the RDF from the site. Mr Nuttall had become concerned that the RDF was not being removed from the site at the expected rate. He raised this with ALG at a meeting on 19 March 2012, where ALG explained the difficulties in supplying its preferred customer and stated it was exploring alternative markets and processing options for the RDF. Mr Nuttall had no reason at that time to believe ALG intended to leave the RDF permanently on the site.

At a meeting on 15 June 2012 Mr Nuttall informed ALG that NKSL would accept no further deliveries. ALG acknowledged this and indicated it intended to remove significant quantities of RDF during 2013. Specifically ALG promised to remove 30 percent of bales by spring 2013 and all RDF by June 2013.

At a meeting on 20 June 2012, at which the Environment Agency also attended, ALG confirmed that if the RDF could not be exported it would be converted to solid recovered fuel (“SRF”).

A further meeting between ALG and NKSL took place on 18 July 2012. ALG promised to remove 25 percent of bales by spring 2013 and all RDF by June 2013.

At a meeting on 25 September 2012 between NKRL, ALG and the Environment Agency, ALG reiterated its intention to remove large volumes of RDF during 2013 and said it had entered contracts with new counterparties to facilitate that process. It also confirmed that it was examining options for processing the RDF into SRF to improve marketability.

Throughout the period from 2011 onwards, Mr Nuttall engaged with the Environment Agency about the condition and future of the RDF. He pressed for the Agency to take enforcement action to compel ALG to remove it. Mr Nuttall undertook maintenance of the site including re-baling the RDF, pest control and constructing a clay bund. He did this as he felt some responsibility for maintaining the site, which meant he simply could not “wash his hands” of the RDF and could not consider the RDF to be discarded.

On 2 May 2014 NKRL wrote to the Environment Agency, noting that ALG had failed to follow through on its promises to remove the RDF. The letter noted the promises made by ALG and observed:

On 20 May 2014, Mr Nuttall met the Environment Agency and raised concerns that ALG’s promise to remove all RDF by 2015 appeared unlikely to be met. He asked the Environment Agency to consider enforcement action against ALG and its managing director to compel removal of the RDF from the site.

On 1 July 2014 NKRL wrote to ALG as follows:

Mr Nuttall became aware in September 2016 that the Environment Agency was conducting a criminal investigation into NKSL and himself concerning the storage of the RDF. The Environment Agency ultimately decided to take no action, confirming this in a letter of 29 July 2021.

While the RDF remained on site Mr Nuttall and his associated companies managed the RDF. This is evidenced, for example, by numerous invoices from PestGuard dated between 2018 and 2024 for inspection and cleaning of monitoring points, the placing of rat poison and the removal of dead rodents.

NKRL was incorporated on 12 March 2012. On 13 July 2012, the Environment Agency transferred the site licence from NKSL to NKRL. There is no information before the Tribunal as to the reason for this. It has not been suggested by HMRC that there was any nefarious purpose for this transfer.

Mr Nuttall was the sole director of NKRL at all material times.

On 6 June 2014, Mr Nuttall served a statutory demand on ALG’s managing director under his personal guarantee relating to the RDF, but on 27 June 2014 the director was declared bankrupt before payment could be made.

ALG became insolvent in the course of 2013 and subsequently entered into a company voluntary agreement and was dissolved on 7 April 2015.

SRF was dissolved in 2015.

Until SRF was dissolved the RDF was owned by SRF. When SRF was dissolved the RDF will have passed as bona vacantia to the Crown. There is no evidence before the Tribunal suggesting the Crown disclaimed its rights to the RDF.

NKRL was dissolved on 28 September 2017. This was because NKRL had no income and ALG owed it around £330,000. From that date there was no waste management licence permitting the storage of the RDF. The material remained in its existing location on the site. Neither NKSL nor Mr Nuttall had legal title to it.

HMRC opened an enquiry in January 2020 and in June 2022 wrote to the Appellants stating their provisional view that a disposal had occurred when NKRL was dissolved. HMRC issued decisions and landfill tax assessments on 20 September 2022.

Between January and July 2013, some RDF was removed but most remained.

In 2008 Mr Nuttall had been diagnosed with a very serious medical condition which has significantly impacted his day-to-day life. In September 2021 Mr Nuttall underwent surgery for his condition. During and after the Covid‑19 pandemic, Mr Nuttall’s attention to the RDF was affected by ill‑health and shielding. By late 2023, the expiry of the lease in January 2025 was approaching and no owner of the material existed. Mr Nuttall therefore began considering how the material could be removed.

Between September 2023 and April 2024, Mr Nuttall explored removal options with waste‑management companies.

On 30 May 2024, an agreement was concluded with TransWaste to remove the RDF. Between 31 May and 23 June 2024, TransWaste removed 3,482 tonnes of RDF. Collections then paused because TransWaste’s site had reached capacity.

In October 2024, Mr Nuttall entered an agreement with Grantham Industries to remove the remaining RDF. By 20 November 2024, a total of 4,113 tonnes had been removed.

By 9 April 2025, all RDF had been removed, totalling 7,686 tonnes.

The material was therefore present on the site continuously from its deposit between June 2011 and June 2012, until complete removal between 31 May 2024 and early 2025. No physical manipulation or relocation of the stockpile occurred at or around the time of the dissolution of NKRL in September 2017. The material remained in situ in the same compound on the site until its eventual removal by contractors in 2024–2025.

The Appellants submit that no taxable disposal occurred on 28 September 2017. They say that the legislation requires a “disposal” within the meaning of ss 40 and 40A FA 1996, and that no such event took place. Their position is that the RDF was brought onto the site by SRF in 2011-2012 under a commercial storage arrangement, that NKSL never owned the material, and that neither NKSL nor Mr Nuttall ever intended to discard or otherwise get rid of it. Their case is that the material was retained on the site pending removal by its owners, and, when that did not occur, NKSL took steps to arrange removal itself. They say this is inconsistent with any intention to dispose of the material.

The Appellants argue that the ordinary meaning of “disposal” requires an act of getting rid of something, and they rely on authorities emphasising intention as a central element of discarding. They say that HMRC’s construction – under which a disposal is said to occur merely because a licence lapses or a company is dissolved – reads out the requirement for a disposal event and is inconsistent with the statutory wording. They further contend that Parliament’s amendments in FA 2018 did not remove the need for an intention to dispose, and that if Parliament had intended to tax mere presence of material, it would have used the concept of “deposit” rather than “disposal”.

The Appellants say that a disposal requires a physical act at the time of the alleged event, and that nothing of that kind occurred on 28 September 2017. The Appellants argue that the only physical placement of the material took place in 2011–2012, when it was lawfully stored under a licence, and that a later change of legal circumstances cannot retrospectively transform that historic placement into a disposal for landfill tax purposes.

They also contend that HMRC’s interpretation produces unreasonable and unintended results, including treating as a disposal any instance where material is left somewhere without any intention to abandon it. They submit that the legislation was designed to target “rogue operators” running illegal waste sites, and that their conduct – continuously seeking the removal of the material, and ultimately procuring its removal – could not fall within that mischief. They say that their case is supported by authorities such as Environment Agency v Inglenorth [2009] EWHC 670 (Admin); [2009] Env. L.R. 33, where material held for future use was not found to have been discarded.

HMRC submit that a taxable disposal occurred when NKRL was dissolved on 28 September 2017 and its environmental permit was automatically revoked. From that date, the RDF was no longer being lawfully stored and had, in HMRC’s view, been abandoned on the site. They rely on the deeming provisions introduced by FA 2018, under which disposals made before 1 April 2018, but present on land at that date, are treated as made on 1 April 2018 for landfill tax purposes.

HMRC emphasise that the assessments were not made on the basis that the Appellants personally disposed of the RDF. Rather, they contend that NKRL, as licence‑holder, was the disposer; and that the Appellants are jointly and severally liable under s 41 FA 1996 because NKSL facilitated the storage of the material and was the lessee or occupier of the land at the time of the disposal, and because Mr Nuttall was the officer of a body corporate who knowingly caused or permitted the disposal to be made.

HMRC argue that intention is not relevant to liability because FA 2018 repealed s 64 FA 1996 (which formerly required an intention to discard). They submit that the concept of “disposal” should be construed broadly and is not confined to a physical act of placing material on land. In their view, a disposal occurs whenever material is “got rid of”, and this includes circumstances where material is left on land without authorisation following revocation of a permit. HMRC reject the Appellants’ reliance on earlier case law that focused on intention, noting that those authorities pre‑date the amendments removing the intention requirement.

They submit that NKRL, having wound up its business and taken no steps to transfer or renew the permit, cannot sensibly be said to have retained the material for future use. By dissolution, NKRL was no longer capable of dealing with the RDF, and its continued presence on the land without authorisation is, HMRC say, “abandonment” and therefore a disposal. They emphasise that the RDF remained on the Site for many years without any lawful entitlement to store it, and that subsequent removal by NKSL does not alter the fact that the disposal event occurred when NKRL ceased to exist.

HMRC say that no regard should be had to facts after the date of the disposal.

Finally, HMRC advance a teleological argument that their interpretation accords with the purpose of the landfill tax regime, particularly the post‑2018 focus on deterring unauthorised waste sites. They argue that it would undermine the statutory scheme if a disposal were found not to have occurred merely because the material was originally lawfully deposited years earlier. On their case, the appeals should therefore be dismissed.

We agree with HMRC that for there to be a disposal it is no longer necessary that the person making the disposal does so with the intention of discarding the material. That is clear from the fact that Parliament has chosen to omit references to intention from the amended wording. Nonetheless, we consider that intention can be a relevant factor in a multi-factorial assessment of the facts to determine whether there has been a disposal.

This was illustrated by the homely example advanced by Mr Carey who asked why, when Ms Brown parked her car, it was not a “disposal” of the car. She responded that it would not be a disposal because it would be intended that she or her husband would collect the car.

We consider one factor, which can be highly relevant to there being a disposal, is the physical placement of property on land. That would generally cover what could be thought of as paradigm cases of disposals other than at landfill sites – such as fly-tipping and the “rogue operators” referred to in the explanatory notes. However, we disagree with the Appellants that physical manipulation is a requirement for there to be a disposal at a given point in time.

With regard to HMRC’s teleological argument (see [75] above) we agree that material being originally lawfully deposited on a temporary basis does not necessarily preclude a later disposal. Indeed, on the facts of this case it could perhaps be that a “disposal” was made by ALG/SRF at the point when they failed to deliver on their promises to remove the RDF, which was their property, from the land. It is unnecessary for us to decide this point: the existence of such a disposal would not necessarily preclude a later disposal of the same material. However we raise this as it is illustrative of the circumstances we consider might give rise to a disposal on our approach and show that it does not go against the statutory objective of deterring unauthorised waste sites.

In cases where there is no physical placement we consider the correct approach must be to look at the facts in the round, considering the rights, responsibilities and other relationships that the person said to be making the disposal has to the relevant material, in addition to the rights, responsibilities and other relationships of third parties with the relevant material. We then think it is right to stand back and ask if the conduct of the person said to make the disposal gives rise to a “disposal”, giving that word its ordinary and natural meaning in the context of the legislation.

We consider that such an assessment can be informed by the intention of both the party being said to make the disposal and relevant third parties. While the original legislation referred expressly to the intention of the person making the disposal, Parliament has repealed that provision and so the present legislation is not so limited. Earlier case law, such as Parkwood at [30], relates to such earlier statutory language.

We consider that subsequent events may be relevant insofar as they shed light on the facts (including the intentions of relevant parties) at the date of the disposal. Indeed, HMRC’s witness admitted that if the licence had been reissued to NKSL within six months of NKRL being dissolved no assessment would have been made.

While we consider the foregoing to be the correct approach, we conclude our decision by briefly stating our findings having no regard to intention, should HMRC’s approach be correct.

We now turn to applying this approach to the facts as at 28 September 2017.

SRF and ALG had been dissolved. When SRF was dissolved legal ownership of the property had passed to the Crown as bona vacantia.

Up to that point the RDF had been kept legally on the site. NKRL had an obligation to minimise the risk of pollution. Following the dissolution of NKRL the licence had been revoked, the RDF was unlawfully on the site and those regulatory obligations in respect of the property did not apply.

NKRL was not dissolved in order to escape such regulatory obligations. It was dissolved because it was insolvent, due to money not being paid by SRF/ALG.

The land on which the RDF was stored was leased to NKSL. It was NKSL that had originally permitted the storage of the RDF on the land, by entering into the transport and storage agreement with SRF. The dissolution of NKRL did not alter this: NKRL was never a party to the lease or transport and storage agreement.

It was never the intention of NKRL, NKSL or Mr Nuttall that the RDF should permanently remain on the site, including at 28 September 2017. So far as NKSL and Mr Nuttall were concerned (NKRL was not then incorporated) the RDF had been brought to the site for the purpose of storage only. Indeed, serious efforts had been made to secure its removal. Under the transport and storage agreement SRF was responsible for removal of the RDF. It was therefore reasonable that NKRL, NKSL and Mr Nuttall first attempted to negotiate with SRF for the removal of the RDF. When that failed it was reasonable that they sought enforcement action by the Environment Agency to secure its removal. The evidence shows that at all points NKRL, NKSL and Mr Nuttall cooperated with the Environment Agency.

NKSL and Mr Nuttall had an economic incentive to remove the RDF. At 28 September 2017 no rent was being paid for the storage of the RDF, indeed it was the lack of payments by ALG which caused NKRL’s insolvency. It was only by removing the RDF that economic value could be obtained from the land by putting the land to another use. Further NKSL was obliged under the lease to remove the RDF by the termination of the lease.

At all material times the RDF was securely maintained on the site so that it was not an environmental hazard. The maintenance included re-baling and controlling rodents. The dissolution of NKRL did not alter this practical reality, as NKSL and Mr Nuttall safely maintained the RDF afterwards.

Mr Nuttall arranged for the RDF to be removed which was paid for by an associated company of NKSL and Mr Nuttall. While it is true the RDF remained on the site for a lengthy period, between 2011/12 and 2024/25 there are good reasons to explain why it took so long for the RDF to be removed: Mr Nuttal’s health, the pandemic and the reasonable attitude that the primary obligation for removing it rested with SRF/ALG. The termination of the site lease in January 2025 provided a deadline for the removal.

At no stage have HMRC suggested that NKRL, NKSL or Mr Nuttall were “rogue operators”.

Viewing these facts in the round, we do not consider that the dissolution of NKRL and associated revocation of the Environment Agency licence caused the RDF to be “disposed” on 28 September 2017.

If we are wrong on the relevance of intention we still do not consider there to have been a disposal on 28 September 2017. In reaching that view we consider it particularly relevant that arrangements were in place such that the practical reality was that the RDF was maintained after that date and NKRL did not have ownership of the RDF.

This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be received by this Tribunal not later than 56 days after this decision is sent to that party. The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice.